Question 1

Use the following information for questions 
Two independent companies, Mintz Co.and Pine Co., are in the home building business.Each owns a tract of land held for development, but each would prefer to build on the other's land.They agree to exchange their land.An appraiser was hired, and from her report and the companies' records, the following information was obtained:   Mintz’s Land  Pine’s Land  Cost and book value $192,000$120,000 Fair value based upon appraisal 240,000210,000\begin{array} { l r r } & 	ext { Mintz&#x27;s Land } & 	ext { Pine&#x27;s Land } \	ext { Cost and book value } & \$ 192,000 &  { \$ 120,000 }\	ext { Fair value based upon appraisal } & 240,000 & 210,000\end{array} Cost and book value  Fair value based upon appraisal ​ Mintz’s Land $192,000240,000​ Pine’s Land $120,000210,000​  The exchange was made, and based on the difference in appraised fair values, Pine paid $30,000 to Mintz.The exchange lacked commercial substance.
-The new land should be recorded on Pine's books at

Accepted Answer

A)  $120,000.
B)  $150,000.
C)  $210,000.
D)  $240,000. E) B) and C)
F) A) and B)

Question 2

Assets classified as Property, Plant, and Equipment must be both long-term in nature and possess physical substance.

Accepted Answer

A) True 
 B)False

Question 3

Use the following information for questions 
A machine cost $120,000, has annual depreciation of $20,000, and has accumulated depreciation of $90,000 on December 31, 2006.On April 1, 2007, when the machine has a market value of $27,500, it is exchanged for a machine with a fair value of $135,000 and the proper amount of cash is paid.The exchange lacked commercial substance.
-The gain to be recorded on the exchange is

Accepted Answer

A)  $0.
B)  $2,500 gain.
C)  $5,000 gain.
D)  $15,000 gain.E) B) and C)
F) A) and B)

Question 4

When an enterprise is the recipient of a donated asset, the account credited may be a

Accepted Answer

A)  paid-in capital account.
B)  revenue account.
C)  deferred revenue account.
D)  all of these.E) B) and C)
F) All of the above

Question 5

When capitalizing interest during construction of an asset, an imputed interest cost on stock financing must be included.

Accepted Answer

A) True 
 B)False

Question 6

Which of these is not a major characteristic of a plant asset?

Accepted Answer

A)  Possesses physical substance
B)  Acquired for use in operations
C)  Yields services over a number of years
D)  All of these are major characteristics of a plant asset.E) A) and B)
F) A) and C)

Question 7

When a company exchanges nonmonetary assets and a loss results, the company recognizes the loss only if the exchange has commercial substance.

Accepted Answer

A) True 
 B)False

Question 8

Taylor Company buys a delivery van with a list price of $30,000.The dealer grants a 15% reduction in list price and an additional 2% cash discount on the net price if payment is made in 30 days.Sales taxes amount to $400 and the company paid an extra $300 to have a special horn installed.What should be the recorded cost of the van?

Accepted Answer

A)  $24,990.
B)  $25,645.
C)  $25,690.
D)  $25,390.E) A) and B)
F) A) and C)

Exam 10: Acquisition and Disposition of Property, Plant, and Equipment

When a company exchanges nonmonetary assets and a loss results, the company recognizes the loss only if the exchange has commercial substance.

Correct Answer
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Assets classified as Property, Plant, and Equipment must be both long-term in nature and possess physical substance.

Correct Answer
verified

Correct Answer
verified

When capitalizing interest during construction of an asset, an imputed interest cost on stock financing must be included.

Correct Answer
verified

Which of these is not a major characteristic of a plant asset?

Correct Answer
verified

Correct Answer
verified

When an enterprise is the recipient of a donated asset, the account credited may be a

Correct Answer
verified

Correct Answer
verified

Exam 10: Acquisition and Disposition of Property, Plant, and Equipment

When a company exchanges nonmonetary assets and a loss results, the company recognizes the loss only if the exchange has commercial substance.

Correct AnswerverifiedShow Answer

Assets classified as Property, Plant, and Equipment must be both long-term in nature and possess physical substance.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When capitalizing interest during construction of an asset, an imputed interest cost on stock financing must be included.

Correct AnswerverifiedShow Answer

Which of these is not a major characteristic of a plant asset?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When an enterprise is the recipient of a donated asset, the account credited may be a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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