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Imhoff Co. began construction of a small building 1. Gutierrez Company is constructing a building. Construction began in 2010 and the building was completed 12/31/10. Gutierrez made payments to the construction company of $1,500,000 on 7/1, $3,300,000 on 9/1, and $3,000,000 on 12/31. Average accumulated expenditures were a. $1,575,000. b. $1,850,000. c. $4,800,000. d. $7,800,000. 2. On May 1, 2010, Goodman Company began construction ...

Other / Other 04 Apr 2016

Assets that qualify for interest cost capitalization 1. To be consistent with the historical cost principle, overhead costs incurred by an enterprise constructing its own building should be a. allocated on the basis of lost production. b. eliminated completely from the cost of the asset. c. allocated on an opportunity cost basis. d. allocated on a pro rata basis between the asset and normal operations. 2. Which of the following cos ...

Other / Other 04 Apr 2016

Companies should assign no portion of fixed overhead True or false: 1. Variable overhead costs incurred to self-construct an asset should be included in the cost of the asset. 2. Companies should assign no portion of fixed overhead to self-constructed assets. 3. When capitalizing interest during construction of an asset, an imputed interest cost on stock financing must be included. 4. Assets under construction for a companyâ ...

Other / Other 04 Apr 2016

An expenditure made in connection with a machine 1. Which of the following is a capital expenditure? a. Payment of an account payable b. Retirement of bonds payable c. Payment of Federal income taxes d. None of these 2. Which of the following is not a capital expenditure? a. Repairs that maintain an asset in operating condition b. An addition c. A betterment d. A replacement 3. In accounting for plant assets, which of the f ...

Other / Other 04 Apr 2016

Storm Corporation purchased a new machine 1. Hardin Company received $40,000 in cash and a used computer with a fair value of $120,000 from Page Corporation for Hardin Company's existing computer having a fair value of $160,000 and an undepreciated cost of $150,000 recorded on its books. The transaction has no commercial substance. How much gain should Hardin recognize on this exchange, and at what amount should the acquired computer be r ...

Other / Other 04 Apr 2016

Mocl Co. began construction of a small building Ex. 1—Weighted-Average Accumulated Expenditures. On April 1, Paine Co. began construction of a small building. Payments of $120,000 were made monthly for four months beginning on April 1. The building was completed and ready for occupancy on August 1. For the purpose of determining the amount of interest cost to be capitalized, calculate the weighted-average accumulated expenditures o ...

Other / Other 04 Apr 2016

Assume the weighted-average accumulated expenditures Use the following information for questions 1 through 3. On March 1, 2010, Newton Company purchased land for an office site by paying $540,000 cash. Newton began construction on the office building on March 1. The following expenditures were incurred for construction: Date Expenditures March 1, 2010 $ 360,000 April 1, 2010 504,000 May 1, 2010 900,000 June 1, 2010 1,440,000 ...

Other / Other 04 Apr 2016

Companies always treat gains or losses from an involuntary conversion True or false: 1. Costs incurred subsequent to the acquisition of an asset are capitalized if they provide future benefits. 2. Improvements are often referred to as betterments and involve the substitution of a better asset for the one currently used. 3. When an ordinary repair occurs, several periods will usually benefit. 4. Companies always treat gains or l ...

Other / Other 04 Apr 2016

Huff Co. exchanged nonmonetary assets 1. On December 1, 2010, Hogan Co. purchased a tract of land as a factory site for $800,000. The old building on the property was razed, and salvaged materials resulting from demolition were sold. Additional costs incurred and salvage proceeds realized during December 2010 were as follows: Cost to raze old building $70,000 Legal fees for purchase contract and to record ownership 10,000 Title guarant ...

Other / Other 04 Apr 2016

The cost of a nonmonetary asset acquired 1. Which of the following is not a condition that must be satisfied before interest capitalization can begin on a qualifying asset? a. Interest cost is being incurred. b. Expenditures for the assets have been made. c. The interest rate is equal to or greater than the company's cost of capital. d. Activities that are necessary to get the asset ready for its intended use are in progress. 2. W ...

Other / Other 04 Apr 2016