Talbot Corporation 3
1 On January 15, 2013, Talbot Company bought a parcel of land as a manufacturing unit web site for $425,000. An previous constructing on the property was demolished, and building started on a brand new constructing which was accomplished on November 31, 2013. Salvaged supplies ensuing from the demolition had been bought for $12,000. Prices incurred throughout this era included: Demolition of previous constructing, $35,000, Architect's charges, $15,000, Authorized charges for title investigation and buy contract, $7,000, and Building prices, $980,000. Talbot ought to document the price of the land and new constructing, respectively, as (Factors : 7) $425,000 and $980,000 $455,000 and $995,000 $460,000 and $995,000 $460,000 and $983,000 2. Corresponds to CLO 1(b) Which of the next prices ought to be absolutely expensed within the interval in which the expenditure is made? (Factors : 7) An outlay made to extend the effectivity of an present plant asset. An outlay made to keep up an present asset in working situation. An outlay made to increase the helpful lifetime of an present asset. Not one of the above prices ought to be absolutely expensed instantly; all ought to be capitalized. Query three.three. Corresponds to CLO 1(c) On January 2, 2013, Apple Valley Produce started building of a brand new processing plant. The plant was anticipated to be completed and prepared to be used on September 30, 2014. Expenditures for building throughout 2013 had been as follows: January 2, 2013, $600,000, July 1, 2013, $800,000, and December 31, 2013, $900,000. To fund this venture, on January 2, 2013, Apple Valley borrowed $1,800,000 on a building mortgage at 10% curiosity. This mortgage was excellent in the course of the building interval. The corporate additionally had $5,000,000 in 9% bonds excellent in 2013. The curiosity capitalized for 2013 ought to be: (Factors : 7) $90,000 $180,000 $107,500 $100,000 four. On March 1, 2004, Tucker Company bought a brand new machine for $355,000. On the time of acquisition, the machine was estimated to have a helpful lifetime of ten years and an estimated salvage worth of $19,000. The corporate has recorded month-to-month depreciation utilizing the straight-line methodology. On July 1, 2013, the machine was bought for $45,000. What achieve ought to be acknowledged from the sale of the machine? (Factors : 7) $21,333 $three,600 $2,800 $19,000 5. Corresponds to CLO 2(a) On July 2, 2013, Peak Energy Company bought equipment for $80,000. Salvage worth was estimated to be $5,000. The equipment can be depreciated over ten years utilizing the double-declining stability methodology. If depreciation is computed on the idea of the closest full month, Peak Energy ought to document depreciation expense on this equipment for 2014 of (Factors : 7) $14,400 $13,500 $eight,000 $7,500 Query 6.6. Corresponds to CLO 2(b) Originally of 2013, Brennan Company bought a supply truck for $80,000. The truck was estimated to have a helpful lifetime of 150,000 miles and a salvage worth of $5,000. It was pushed 29,000 miles in 2013 and 33,000 miles in 2014. What's the depreciation expense for 2014? (Factors : 7) $14,500 $15,467 $16,500 $17,600 Query 7.7. Corresponds to CLO 2(c) Volmer Company owns equipment with a e book worth of $400,000. It's estimated that the equipment will generate future money flows of $375,000. The equipment has a good worth of $325,000. Volmer ought to acknowledge a loss on impairment of (Factors : 7) $ -Zero- $25,000 $50,000 $75,000 eight. Corresponds to CLO 2(d) Plymouth Mining Company acquired, for $5,500,000, a tract of land containing an extractable pure useful resource. Geological surveys estimate that the recoverable reserves can be 1,000,000 tons. Plymouth is required by its buy contract to revive the land at an estimated value of $750,000. The land is predicted to have a worth of $1,250,000 after restoration. Plymouth maintains no inventories of extracted supplies. What is the quantity of depletion per ton? (Factors : 7) $four.25 $5.00 $5.50 $6.25 Query 9.9. Corresponds to CLO three(a) Titan Company acquired a patent on September 28, 2013. Titan paid money of $63,000 to the vendor. Authorized charges of $2,000 had been paid associated to the acquisition. At what quantity ought to Titan document the patent on its books? (Factors : 7) $65,000 $63,000 $61,000 $2,000 Query 10.10. Corresponds to CLO three(b) Hodgson Firm's December 31, 2014 stability sheet experiences belongings of $eight,500,000 and liabilities of $four,500,000. All of Hodgson's e book values approximate their truthful worth, aside from land, which has a good worth that's $500,000 higher than its e book worth. On December 31, 3014, Motley Company paid $10,500,000 to accumulate Hodgson. What quantity of goodwill ought to Motley document on account of this buy? (Factors : 7) $6,000,000 $four,500,000 $2,000,000 $ -Zero- 11. Corresponds to CLO three(c) Progressive Applied sciences, Inc. incurred analysis and improvement prices of $160,000 and authorized charges of $36,000 to accumulate a patent. The patent has a authorized lifetime of 20 years and a helpful lifetime of 10 years. What quantity ought to Progressive Applied sciences document as Patent Amortization Expense within the first yr? (Factors : 7) $1,800 $three,600 $eight,000 $19,600 12. Stewart Firm acquired Meyer Manufacturing on January 1, 2013 for $6,800,000 and recorded goodwill of $1,800,000 on account of that buy. At December 31, 2013, Meyer Manufacturing Division had a truthful worth of $four,600,000. The online identifiable belongings of the Division, excluding goodwill, had a good worth of $three,200,000 at the moment. What quantity of loss on impairment of goodwill ought to Stewart document in 2013? (Factors : 7) $ -Zero- $2,200,000 $1,400,000 $400,000 13. Corresponds to CLO four(a) Lillian Properties leased a constructing to Hopping Industries for a ten yr time period at an annual rental of $250,000. The lease started January 1, 2013, at which era Lillian acquired $1,000,000 protecting the primary two years' hire of $500,000 and a safety deposit of $500,000. The deposit is not going to be returned to Hopping upon expiration of the lease, however can be utilized to fee of hire for the final two years of the lease. What portion of the $1,000,000 ought to be proven as present and long-term liabilities, respectively, in Lillian's December 31, 2013 stability sheet? (Solutions proven with Present Liabilities listed first, Lengthy-term Liabilities listed second. ) (Factors : 7) $500,000 $500,000 $250,000 $500,000 $500,000 $250,000 $ -Zero- $1,000,000 Query 14.14. Corresponds to CLO four(b) Which of the next is the correct approach to report a achieve contingency? (Factors : 7) As deferred income. As an accrued quantity. As an account receivable with extra disclosure explaining the character of the contingency. As a disclosure solely. Query 15.15. Corresponds to CLO four(c) On January 1, 2014, Huntington Company issued eight yr bonds with a face worth of $6,000,000 and a said rate of interest of 6%, payable semiannually on June 30 and December 31. The bonds had been bought to yield eight%. Desk values are: 37 What's the subject worth of the bonds? $5,301,360 $5,308,920 $5,520,000 $6,742,800 16. Corresponds to CLO four(d) On December 31, 2013, the 11% bonds payable of Goodly Corporationhad a carrying quantity of $2,Zero40,000. The bonds, which had a face worth of $2,000,000 had been issued at a premium to yield 10%. Goodly makes use of the effective-interest methodology of amortization. Curiosity is paid on June 30 and December 31. On July 1, 2014, a number of years earlier than their maturity, Goodly retired the bonds at 103. The curiosity fee on June 30, 2014 was made as scheduled. The loss on retirement, ignoring taxes, is (Factors : 7) $40,000 $28,000 $20,000 $ -Zero- Query 17.17. Corresponds to CLO 5(a) The present FASB viewpoint on accounting for leases is finest described as: (Factors : 7) All leases ought to be capitalized. Leases ought to by no means be capitalized. All long-term leases ought to be capitalized. Leases just like installment purchases ought to be capitalized. 18. Corresponds to CLO 5(b) On January 1, 2013, Martin Company signed a ten-year noncancelable lease for equipment. The phrases of the lease known as for Martin to make annual funds of $350,000 on the finish of every yr for ten years with title to go to Martin on the finish of this era. The equipment has an estimated helpful lifetime of 20 years and no salvage worth. Martin makes use of the straight-line methodology of depreciation for all of its fastened belongings. Martin accounted for this lease transaction as a capital lease. The lease funds had been decided to have a gift worth of $1,977,577 at an efficient rate of interest of 12%. With respect to this capitalized lease, Martin ought to document for 2013: (Factors : 7) Depreciation expense of $197,758 and curiosity expense of $420,000. Depreciation expense of $197,758 and curiosity expense of $237,309. Depreciation expense of 98,879 and curiosity expense of $237,309. Lease expense of $350,000. 19. Corresponds to CLO 5(c) On December 31, 2014, Pacific Rail Company leased a practice automobile from Southern Transportation Firm for a ten yr interval expiring December 30, 2024. Equal annual funds of $120,000 are due on December 31 of every yr, starting with December 31, 2014. The lease is correctly categorised as a capital lease on Pacific Rail's books. The current worth at December 31, 2013 of the ten lease funds over the lease time period discounted at eight% is $869,627. Assuming the primary fee is made on time, the quantity that ought to be reported by Pacific Rail Company because the lease legal responsibility on its December 31, 2014 stability sheet is (Factors : 7) $749,627 $800,000 $869,627 $1,Zero80,000 20. Corresponds to CLO 5(d) Colfax Company enters into an settlement with Reynolds Leases on January 1, 2014 for the aim of leasing a machine for use in its manufacturing operations. The time period of the noncancelable lease is 5 years with no renewal choice. Funds of $200,000 are due on December 31 of every yr. The truthful worth of the machine on January 1, 2014, is $800,000. The machine has a remaining financial lifetime of 10 years, with no salvage worth. The machine reverts to the lessor upon termination of the lease. Colfax Company's incremental borrowing charge is 10% per yr. Colfax doesn't have information of the eight% implicit charge utilized by Reynolds. The issue for the current worth of an unusual annuity of 1, for five intervals at 10% is three. 79079. The issue for the current worth of an unusual annuity of 1, for five intervals at eight% is three. 99271. What sort of lease is that this from Colfax Company's viewpoint? (Factors : 7) Gross sales-type lease Direct-financing lease Capital lease Working lease Query 21. 21. Corresponds to CLO 6(a) Roberts Company has 100,000 shares of $10 par frequent inventory approved. The next transactions came about throughout 2013, the primary yr of the company's existence: Bought 10,000 shares of frequent inventory for $14 per share Issued 20,000 shares of frequent inventory in change for authorized providers valued at $300,000 On the finish of Roberts' first yr, complete paid-in capital amounted to (Factors : 7) $100,000 $140,000 $300,000 $440,000 22. Corresponds to CLO 6(b) On June 15, Handel Company reacquired 10,000 shares of its $10 par worth frequent inventory for $19 per share. Handel makes use of the fee methodology to account for treasury inventory. The journal entry to document the reacquisition of the inventory ought to debit (Factors : 7) Frequent Inventory for $100,000 Frequent Inventory for $100,000 and Paid-in Capital in Extra of Par for $90,000 Treasury Inventory for $190,000 Treasury Inventory for $100,000 Query 23.23. Corresponds to CLO 6(c) The truthful worth of Willow Firm's frequent inventory was $57 per share at December 31, 2013 and $63 per share at December 31, 2014. Willow acquired 7,000 shares of its personal frequent inventory at $60 per share on March 10, 2014, and bought 5,000 of those shares at $65 per share on September 25, 2014. Willow Firm makes use of the fee methodology to account for treasury inventory. The journal entry to document the sale of the treasury inventory ought to credit score (Factors : 7) Treasury Inventory for $300,000 and Retained Earnings for $25,000 Treasury Inventory for $285,000 and Retained Earnings for $40,000 Treasury Inventory for $300,000and Paid-in Capital from Treasury Inventory for $25,000 Treasury Inventory for $325,000 Query 24. 24. Corresponds to CLO 6(d) Beneath GAAP, most well-liked inventory with which of the next options ought to be reported as a legal responsibility on the stability sheet: (Factors : 7) Convertible Noncumulative Redeemable Callable Query 25.25. Corresponds to CLO 7(a) Farnsworth Inc. declared a $450,000 money dividend. It presently has 10,000 shares of eight%, $100 par worth cumulative most well-liked inventory excellent. It's one yr in arrears on its most well-liked inventory. How a lot money will Farnsworth distribute to the frequent stockholders? (Factors : 7) $290,000 $370,000 $160,000 $450,000 26. Corresponds to CLO 7(b) Weston Company owned 80,000 shares of Brandt Company, bought in 2008 for $320,000. On December 20, 2013, Weston declared a property dividend of all of its Brandt Company shares on the idea of 1 share of Brandt for each 10 shares of Weston frequent inventory held by its shareholders. The property dividend was distributed on January 10, 2014. On the declaration date, the mixture market worth of the Brandt Company shares held by Weston was $610,000. The entry to document the declaration of the dividend would come with a debit to Retained Earnings (property dividends declared) of (Factors : 7) $320,000 $610,000 $290,000 $ -Zero- 27. Corresponds to CLO 7(c) Harping Company declared an $800,000 dividend, $200,000 of which was liquidating. How would this distribution have an effect on Retained Earnings and Further Paid-in Capital, respectively? (Reply is proven with Retained Incomes listed first, Further Paid-in Capital listed second. ) (Factors : 7) No impact $800,000 Lower $800,000 Lower No impact $600,000 Lower $200,000 Lower Noeffect No impact Query 28.28. Corresponds to CLO 7(d) After a number of worthwhile years, Pear Company's inventory worth had elevated by 10-fold. Administration prefers the inventory worth to be inside vary of the majority of potential buyers, and on June 30, 2013, cut up its inventory 2-for-1. Previous to the cut up, Pear's stockholders' fairness part confirmed: Frequent Inventory, 2,000 shares at $100 par. After the cut up, Pear's stockholders' fairness part confirmed: (Factors : 7) Frequent inventory, four,000 shares at $50 par Frequent inventory, 2,000 shares at $200 par Frequent inventory, 1,000 shares at $200 par Frequent inventory, four,000 shares at $100 par