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Exam 10: Property, plant, and Equipment and Intangible Assets: Acquisition and Disposition

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Question 31

Multiple Choice

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Assets acquired under multi-year deferred payment contracts are:

A) Valued at their fair value on the date of the final payment.
B) Valued at the present value of the payments required by the contract.
C) Valued at the sum of the payments required by the contract.
D) None of these answer choices are correct.

E) B) and C)
F) None of the above

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Question 32

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Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

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Question 33

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Software development costs are capitalized if they are incurred:

The fixed-asset turnover ratio provides:

In accounting for oil and gas exploration costs,companies:

Cheney Company sold a 20-ton mechanical draw press for $60,000.The old draw press cost $77,000 and had a book value of $55,000. Required: Prepare the journal entry to record the disposition.

It's not unusual for one company to buy another company in order to obtain technology that the acquired company has developed or is in the process of developing. Required: Explain the accounting treatment of purchased technology.

Peanut Corporation exchanged land and cash of $6,500 for equipment.The land had a book value of $45,000 and a fair value of $34,000.Assume the exchange has commercial substance. Required: Prepare the journal entry to record the exchange.

Under International Financial Reporting Standards,development expenditures are:

Interest capitalized for 2016 was:

Axcel Software began a new development project in 2015.The project reached technological feasibility on June 30,2016,and was available for release to customers at the beginning of 2017.Development costs incurred prior to June 30,2016,were $3,200,000 and costs incurred from June 30 to the product release date were $1,400,000.The 2017 revenues from the sale of the new software were $4,000,000,and the company anticipates additional revenues of $6,000,000.The economic life of the software is estimated at four years.2017 amortization of the software development costs would be:

Costs incurred after discovery of a natural resource but before production begins are reported as expenses of the period in which the expenditures are made.

Dreamworld's average accumulated expenditures for 2016 was:

In Case B,Grand Forks would record a gain/(loss) of:

Use the following to answer questions In its 2013 annual report to shareholders,Boston Beer Company,Inc.included the following in a disclosure note: E.Property,Plant and Equipment Property,plant and equipment for the years ended December 28,2013,and December 29,2012,consisted of the following ($ in thousands): The Company recorded depreciation related to these assets of $23,565 thousand in the 2013 fiscal year. Also,Boston Beer reported the following information in the annual report ($ in thousands): -Show the journal entry to record Boston Beer's sale of property,plant and equipment during 2013.

Under current GAAP,fair value is used to measure the components of all nonmonetary exchanges.

Average accumulated expenditures for 2017 was:

A company that prepares its financial statements according to International Financial Reporting Standards must calculate amortization of capitalized software development costs in the same way as under U.S.GAAP.

According to International Financial Reporting Standards,all research and development expenditures are expensed in the period incurred.

Sales tax paid on equipment acquired for use in the business is not capitalized.