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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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The asset retirement obligation (rounded) that should be recognized by MMC at the beginning of the extraction activities is:

A) $8.2 million.
B) $14.7 million.
C) $18 million.
D) $30 million.

E) A) and D)
F) C) and D)

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Question 32

Multiple Choice

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The exclusive right to benefit from a creative work, such as a film, is a:

A) Patent.
B) Copyright.
C) Trademark.
D) Franchise.

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

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Question 33

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According to U.S. GAAP, the following costs would be expensed as R&D:

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

Use a T- account to show the balances and changes during 2010 in Boston Beer's: Property, Plant, and Equipment account and its Accumulated depreciation-Property, Plant, & Equipment account.

Interest may be capitalized:

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.

P. Chang & Co. exchanged land and $9,000 cash for equipment. The book value and the fair value of the land were $106,000 and $90,000, respectively. Chang would record equipment and a gain/(loss) of:

Software development costs are capitalized if they are incurred:

A distinguishing characteristic of intangible assets is the degree of uncertainty about when or if they will provide future benefits.

Assuming that the exchange lacks commercial substance, Alamos would record a gain/(loss) of:

Which of the following does not pertain to accounting for asset retirement obligations?

Bloomington Inc. exchanged land for equipment and $3,000 in cash. The book value and the fair value of the land were $104,000 and $90,000, respectively. Bloomington would record equipment and a gain/(loss) of:

The fair value of the asset, debt, or equity securities given in a noncash acquisition should determine the value of the consideration received.

Briefly explain how R&D is reported in financial statements.

The initial cost of property, plant, and equipment includes all the identifiable expenditures necessary to bring the asset to its desired condition and location for use.

Productive assets that are physically consumed in operations are:

Grab Manufacturing Co. purchased a 10-ton draw press at a cost of $180,000 with terms of 5/15, n/45. Payment was made within the discount period. Shipping costs were $4,600, which included $200 for insurance in transit. Installation costs totaled $12,000, which included $4,000 for taking out a section of a wall and rebuilding it because the press was too large for the doorway. The capitalized cost of the 10-ton draw press is:

Interest capitalized for 2014 was:

How are assets valued when they are acquired by issuing stock?