29 Jun Question . Reiley Co. purcha
Question
. Reiley Co. purchased land as a factory site for $1,000,000. Reiley paid $40,000 to tear down two buildings on the land. Salvage was sold for $5,400. Legal fees of $3,480 were paid for title investigation and making the purchase. Title insurance cost $2,400. Architect’s fees were $41,200. Excavation cost $10,040. The contractor was paid $2,400,000. Interest costs during construction were $170,000.
The cost of the building that should be recorded by Reiley Co. is (Points : 4)
$2,611,200
$2,615,840
$2,621,240
$2,661,240
Question 2.2. On October 1, Carr Co. began construction of a small building. Payments of $150,000 were made monthly for three months beginning October 1. The building was completed and ready for occupancy on December 31. In determining the amount of interest cost to be capitalized, the weighted-average accumulated expenditures are (Points : 4)
$37,500
$150,000
$75,000
450,000
Question 3.3. During 2012, Foster Co. incurred average accumulated expenditures of $500,000 during construction of assets that qualified for capitalization of interest. The only debt outstanding during 2012 was a $600,000, 10%, 5-year note payable dated January 1, 2010. What is the amount of interest that should be capitalized by Foster during 2012? (Points : 4)
$0
$10,000
$50,000
$60,000
Question 4.4. On August 1, 2012, Kegan Corporation purchased a new machine on a deferred payment basis. A down payment of $3,000 was made and 4 monthly installments of $4,000 each are to be made beginning on September 1, 2012. The cash equivalent price of the machine was $16,200. Kegan incurred and paid installation costs amounting to $500. The amount to be capitalized as the cost of the machine is (Points : 4)
$16,500.
$16,200
$19,000
$16,700
Question 5.5. On December 1, Young Corporation exchanged 5,000 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 Young at a cost of $40 per share, and on the exchange date the common shares of Young had a fair market value of $50 per share. Young received $9,000 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 (Points : 4)
$191,000.
$200,000
$241,000
$250,000
Question 6.6. Equipment that cost $55,000 and has accumulated depreciation of $25,000 is exchanged for similar equipment with a fair value of $40,000 and $10,000 cash is received (assume commercial substance).
The gain to be recognized from the exchange is (Points : 4)
$4,000 gain
$5,000 gain
$15,000 gain
$20,000 gain
Question 7.7. On March 6, 2013, Calle Corporation purchased machinery for $25,000. The estimated service life of the machinery is 10 years and the estimated residual value is $5,000. Calle uses straight-line depreciation and follows the half-year convention. What amount of depreciation expense should be recorded for 2013? (Points : 4)
$1,000
$1,250
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