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Multiple Choice Quiz
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1
Each of the following would be considered property, plant, and equipment or an intangible asset except:
A)An oil well.
B)A building.
C)Inventories.
D)A patent.
2
The initial cost of land would include all of the following except:
A)The cost of grading.
B)Title search costs.
C)Recording fees.
D)Property taxes for the current period.
3
The following expenditures relate to machinery purchased by Callabasas Manufacturing:

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At what amount should Callabasas capitalize the machinery?
A)$17,300
B)$19,300
C)$19,600
D)$17,600
4
Goodwill is the excess of the purchase price of an acquired company over the:
A)Fair value of the net assets acquired.
B)Sum of the fair values of the assets acquired.
C)Book value of the acquired company.
D)All of these answer choices are incorrect.
5
The Piazza Baseball Bat Company acquired all of the outstanding common stock of Dierdorf Lumber for $3,500,000. The book values and fair values of Dierdorf's assets and liabilities on the date of purchase were as follows:

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Piazza should record goodwill of:
A)$0
B)$940,000
C)$340,000
D)$330,000
6
Cello Corporation purchased three patents at a total cost of $960,000. The appraised values of the individual patents were as follows:

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The costs that should be assigned to Patents 1, 2, and 3, respectively, are:
A)$320,000; $320,000; $320,000.
B)$480,000; $320,000; $160,000.
C)$600,000; $400,000; $200,000.
D)All of these answer choices are incorrect.
7
The City of San Martin gave a parcel of land to the Canova Company as part of an agreement requiring Canova to construct its office building on the donated land. The land cost the city $80,000 when purchased several years ago and had an appraised value of $200,000 on the date it was given to Canova. As a result of the donation, Canova should record:
A)A debit to land of $80,000.
B)A credit to revenue of $200,000.
C)A credit to paid-in capital of $200,000.
D)A credit to gain of $120,000.
8
Wolf Computer exchanged a machine with a book value of $40,000 and a fair value of $45,000 for a patent. In addition to the machine, $6,000 in cash was given. Wolf should recognize:
A)A gain of $11,000.
B)A loss of $1,000.
C)A gain of $5,000.
D)No gain or loss.
9
Assume the same facts as in question 8, except that the machine is exchanged for a similar machine rather than for a patent. Wolf should recognize:
A)A gain of $11,000.
B)A loss of $1,000.
C)A gain of $5,000.
D)No gain or loss.
10
The Ghirardi Company's fixed-asset turnover ratio for 2016 was 5.0 and average fixed assets employed during the year were $2,040,000. Ghirardi's net sales for the year were:
A)$408,000.
B)$10,200,000.
C)$12,000,000.
D)All of these answer choices are incorrect.
11
The specific interest and the weighted-average interest methods for determining capitalized interest will yield the same results except when:
A)Construction debt interest rates differ from the rates of other interest-bearing debt.
B)There is no construction-related debt.
C)There is no interest-bearing debt other than construction related.
D)Construction debt interest rates are the same as the rates of other interest-bearing
E)debt.
12
In January of 2016, the Falwell Company began construction of its own manufacturing facility. During 2016, $6,000,000 in costs were incurred evenly throughout the year. Falwell took out a $2,500,000, 10% construction loan at the beginning of the year. The company had no other interest-bearing debt. What amount of interest should Falwell capitalize in 2016?
A)$0
B)$600,000
C)$300,000
D)$250,000
13
Micro Tech, Inc. made the following cash expenditures during 2016 related to the development of a new technology which was patented at the end of the year:

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The equipment purchased has no future use beyond the current project. $10,000 of the materials and supplies used and $32,000 in salaries relate to the construction of prototypes. In its 2016 financial statements Micro Tech should report research and development expenses of:
A)$306,000
B)$348,000
C)$351,000
D)$208,000
14
During 2016, the Balboa Software Company incurred development costs of $2,000,000 related to a new software project. Of this amount, $400,000 was incurred after technological feasibility was achieved. The project was completed in the middle of the year and the product was available for release to customers on July 1. Year 2016 revenues from the sale of the new software were $500,000 and the company anticipated future additional revenues of $4,500,000. The economic life of the software is estimated at four years. Year 2016 amortization of software development costs should be:
A)$40,000
B)$100,000
C)$50,000
D)$200,000
15
Pribuss Engineering prepares its financial statements according to International Financial Reporting Standards. During 2016, the company incurred the following costs related to a new product design:

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The development costs were incurred after technological and commercial feasibility was established and after the future economic benefits were deemed probable. The project was successfully completed and the new product was patented before the end of the 2016 fiscal year. What amount should Pribuss expense in its 2016 income statement related to the above expenditures?
A)$1,300,000
B)$2,400,000
C)$3,700,000
D)$3,752,000





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