Question Details

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 recorded, respectively?
a.	$0 and $110,000
b.	$769 and $110,769
c.	$10,000 and $120,000
d.	$40,000 and $150,000

Use the following information to answer questions 2 & 3.

Jamison Company purchased the assets of Booker Company at an auction for $1,400,000. An independent appraisal of the fair value of the assets is listed below:
Land	$475,000
Building	700,000
Equipment	525,000
Trucks	850,000
2.	Assuming that specific identification costs are impracticable and that Jamison allocates the purchase price on the basis of the relative fair values, what amount would be allocated to the Trucks?
a.	$466,667
b.	$700,000
c.	$840,000
d.	$850,000

	3.	Assuming that specific identification costs are impracticable and that Jamison allocates the purchase price on the basis of the relative fair values, what amount would be allocated to the Building?
a.	$529,730
b.	$700,000
c.	$1,275,000
d.	$384,314

	4.	On December 1, Miser Corporation exchanged 2,000 shares of its $25 par value common stock held in treasury for a parcel of land to be held for a future plant site. The treasury shares were acquired by Miser at a cost of $40 per share, and on the exchange date the common shares of Miser had a fair market value of $50 per share. Miser received $6,000 for selling scrap when an existing building on the property was removed from the site. Based on these facts, the land should be capitalized at
a.	$74,000.
b.	$80,000.
c.	$94,000.
d.	$100,000.

	5.	Storm Corporation purchased a new machine on October 31, 2010. A $1,200 down payment was made and three monthly installments of $3,600 each are to be made beginning on November 30, 2010. The cash price would have been $11,600. Storm paid no installation charges under the monthly payment plan but a $200 installation charge would have been incurred with a cash purchase. The amount to be capitalized as the cost of the machine on October 31, 2010 would be
a.	$12,200.
b.	$12,000.
c.	$11,800.
d.	$11,600.





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