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113.Information for heterogeneous assets A, B, and C of America Health and Fitness Club is provided below. The company uses composite depreciation for these assets. Estimated Residual ? Estimated Asset Cost Value Life A $100,000 $10,000 9 years B 60,000 4,000 8 years C 40,000 8,000 4 years   Required: a. Calculate the composite depreciation rate. b. Journalize the sale of Asset C for $28,000 after two full years of use. 114.On January 1, 2016, Check.
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91.Internal use software costs are a.always expensed b.always capitalized c.capitalized once the preliminary cost is completed d.capitalized once the preliminary cost is completed and the software will be used to perform the function intended 92.In 2014, Xenex Market Services began development of a customer management software package for their own internal use and incurred $40,000.
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11.Engineering follow-through in an early stage of commercial production can be included in R&D. a.True b.False 12.Legal work in connection with patent applications or litigation, and the sale or licensing of patents is excluded from R & D. a.True b.False 13.GAAP requires companies to disclose any costs of research and development acquired and written off as.
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127.On January 1, 2015, Smith-Jones Company purchased office furniture for $80,000. Other data on the purchase include the following: Estimated useful life 10 years MACRS life 7 years Estimated residual value $5,000 Financial statement depreciation Straight-line MACRS depreciation 200% declining balance ? The MACRS Depreciation table is as follows: ? MACRS Depreciation as a Percentage of the Cost of the Asset Year of Life 3 5 7 10 1 33.33% 20.00% 14.29% 10.00% 2 44.45% 32.00% 24.49% 18.00% 3 14.81% 19.20% 17.49% 14.40% 4 7.41% 11.52% 12.49% 11.52% 5 ? 11.52% 8.93% 9.22% 6 ? 5.76% 8.92% 7.37% 7 ? ? 8.93% 6.55% 8 ? ? 4.46% 6.55% 9 ? ? ? 6.56% 10 ? ? ? 6.55% 11 ? ? ? 3.28% ??Required: ? a. Compute the.
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21.Investments that are typically held for short periods of time and sold by the company in the expectation of a profit on the short-term differences in price are classified as a.available-for-sale securities. b.trading securities. c.held-to-maturity securities. d.marketable securities. 22.Which of the following categories of investments are reported at their fair values on the balance sheet.
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121.On January 1, 2016 Hill Bowling purchased equipment for $3.5 million. The equipment is being depreciated by the straight-line method over 10 years with no residual value. In 2020, new advanced bowling equipment has come on the market. As a result, Hill believes the bowling equipment currently being used is.
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104.On January 1, 2017, Waters Corp. bought $25,000 of Violet Co.'s 9% ten-year bonds for $25,300 to yield 8%. The bonds pay interest annually and are classified as held-to-maturity. ? Required: Using the effective interest method, journalize the receipt of the interest and amortization at December 31, 2018. 105.On January 1, 2017, Brewster’s, Inc..
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110.During January 2017, Long Corporation for the first time decided to acquire some equity securities as a means of putting some of its idle cash to work. The securities are classified as investments available-for-sale. At March 31, when Long prepares its first quarter financial statements, the following information about the.
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72.On June 15, 2015, Jupiter Corporation purchased a machine for $50,000 with an estimated useful life of six years and a residual value of $8,000. The company uses units-of-production depreciation and estimates the machine will last 300,000 units. The machine made 15,000 units in 2015 and 45,000 units in 2016..
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108.First Bank purchased the following securities during 2017 and classified them all as trading securities. ? ? ? ? ? ? Purchased 500 shares of Duke Company's common stock for $55 per share Purchased 2,000 shares of Queen Company's common stock for $45 per share Purchased 1,000 shares of Prince Company's preferred stock at $120 per share. Received $3,000 of.
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135.IFRS and GAAP differ in the application of the fair value concept for impairment tests applied to intangible assets.Required:Describe the fair value concept as it is applied for impairment tests in IFRS and GAAP, highlighting the differences. 136.Because goodwill only produces cash flows in connection with other assets, it is tested.
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108.The Family company was expanding as a result they engaged in the following activities beginning in 2016. a. Paid $30,000 to the Major League Ballpark to have the Family name displayed on the billboard for three years. b. Purchased a franchise for $20,000 to operate trolley services around the city for tourists. The trolley.
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1.Purchased intangible assets are generally expensed at their acquisition costs because the future economic benefits associate with them are difficult to measure. a.True b.False 2.Unidentifiable intangible assets are intangible assets that can be separated from the company and sold, transferred, licensed, rented, or exchanged. a.True b.False 3.Identifiable intangible assets are intangible assets that can be separated.
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111.During 2016, Quartz, Inc. developed a new financial accounting software package for sale. The company spent $15,000,000 on the system, 30% of which was incurred prior to technological feasibility being established. The package was put on sale January 1, 2017, and the company estimates that over the five-year life of.
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51.Which of the followingis correct regarding available-for-sale securities? a.Available-for-sale securities are reported at cost on the balance sheet date, and unrealized holding gains and losses are included in income of the current period. b.Available-for-sale securities are reported at fair value on the balance sheet date, and unrealized holding gains and losses are.
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108.On January 1, 2016, Paradise Hotels and Spa’s purchased a machine. Residual value was estimated to be $13,000 after a 15-year life. Using sum-of-the-years'-digits depreciation, the company recorded $8,500 depreciation expense in 2018. ? Required: ? Compute the cost of the machine. 109.On January 1, 2016, Major purchased a machine that had an estimated useful.
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122.What factors should a company consider when estimating the useful life of an intangible asset? 123.What characteristics do Intangible and tangible noncurrent assets have in common? 124.List 3 activities that can be included in R&D. 125.List 5 activities that would be excluded from R & D. 126.For intangible assets that are amortized what does.
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41.The Chuck Company purchased a truck on January 1, 2016. The truck cost $106,000 and was expected to have a residual value of $14,000 at the end of 2018. Chuck uses the 150%-declining-balance depreciation method. What amount of depreciation should Chuck record on the truck in 2016? a.$18,400 b.$31,800 c.$27,600 d.$21,200 42.The Antarctica Co. acquired.
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132.Companies can apply composite depreciation to a grouping of dissimilar assets. What procedures must be followed? 133.What disclosures are required by GAAP for depreciation? 134.?When accounting for long-lived assets, companies may make modifications in the procedures related to computing depreciation for specific assets. Companies may change depreciation methods or may change an.
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103.The following costs were incurred by Mark Corporation during the current year: ? Legal fees paid to attorneys in connection with a patent application related to a new invention developed by the company's laboratory personnel: $40,000. ? Salaries of personnel involved in searching for applications of new research findings: $150,000. ? Cost of machinery acquired on.
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31._____________ occurs when the fair value of an asset is less than its carrying value. a.Unidentification b.Amortization c.Goodwill d.Impairment 32.Which of the following groups would be classified as intangible assets for financial accounting and reporting purposes? a.Long-term notes receivable, copyrights, goodwill, and trademarks b.Patents, software development costs, franchises, copyrights, and trademarks c.Computer software costs, development costs for internally.
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117.On January 1, 2016, Sally, Inc. bought a patent for $100,000. There were ten years left of the patent's legal life. On July 1, 2018, the company successfully defended the patent in court at a cost of $30,000. ? Required: ? Compute the amount of patent amortization expense for 2018. Assume Sally calculates amortization.
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51.At the date of purchase, materials, equipment, facilities, and intangibles purchased from others that have no alternative future uses in research and development or other activities should be a.capitalized b.charged directly to retained earnings c.included in R&D expense immediately d.charged as a loss from continuing operations 52.Which of the following expenditures cannot be included in.
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90.Refer to Exhibit 13-03. What amount should Train record for the discount on Notes Receivable? a. $0 b. $16,505 c. $21,505 d. $58,495 91.Refer to Exhibit 13-03. What amount would Train record as interest income on December 31, 2017? a. $6,434 b. $8,800 c. $2,366 d. $0 92.Refer to Exhibit 13-03. What amount would Train show as the balance for Discount on Notes Receivable on December 31, 2018? a. $7,928 b. $7,142 c. $15,071 d. $64,929 93.A.
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81.Development costs related to computer software that is to be sold, leased, or otherwise marketed should be accounted for in which of the following ways? a.All software development costs should be recorded as R&D expense. b.All software development costs should be capitalized. c.All software development costs should be recorded as R&D expense until.
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41.________ are capitalized and amortized over their useful life. a.Purchased identifiable intangible assets with finite life b.Research and development costs c.Purchased identifiable intangible assets with indefinite life d.Unidentifiable intangible assets 42.________ are expensed as incurred. a.Purchased identifiable intangible assets with finite life b.Research and development costs c.Purchased identifiable intangible assets with indefinite life d.Unidentifiable intangible assets 43.The allocation of the.
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128.What are the five basic categories that identifiable intangible assets can be classified? 129.What are the two methods that a company can amortize software developments costs and which one is more likely to be used? 130.Provide two examples of internally developed goodwill and what distinguishes them from other identifiable intangible assets? 131.Provide two.
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92.Tangible assets that are attached to natural resources are depreciated over a. the life of the natural resource b. the shorter of the tangible asset's life or the natural resource's life c. the life of the tangible asset d. the longer of the tangible asset's life or the natural resource's life 93.Choice Mining Co. paid $9,000 for some land.
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72.Waldo Company owns 30% of Randy Company. During 2017, Randy reported earnings of $650,000 and paid cash dividends of $345,000. What effect would this have on Waldo’s investment account and net income? Investment Account Net Income I. +$195,000 +$103,500 II.      --- +$103,500 III. +$ 91,500 +$103,500 IV. +$ 91,500 +$195,000 ? a. I b. II c. III d. IV Exhibit 13-1 On January 1, 2017, Oak Corporation paid $900,000 for 87,500 shares of Beech.
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115.Listed below is a series of statements about various costs associated with intangibles. ____ a. Software production costs incurred prior to technological feasibility being established. ____ b. Continuing franchise costs. ____ c. The cost paid over the fair value of an acquired company's net assets. ____ d. Maintenance and customer support costs incurred after a software package is released for sale. ____ e. Legal costs.
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62.On January 6, 2017, Michael Company acquired 4,000 shares (or 10%) of George Corporation's common stock at $25 per share. The securities are classified as available-for-sale investments. On October 24, 2017, George declared and paid a cash dividend of $1 per share. On December 31, 2017, the market value of.
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61.All of the following items are included in research and development costs except a.legal work in connection with patent application. b.design of prototype models. c.evaluation of apotential new product. d.research aimed at discovery of new knowledge. 62.All of the following items are expensed as start-up costs except a.promotional costs for opening a new facility. b.one-time costs for.
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82.On January 1, 2017, Fargo Company purchased 30% of the common stock of Fairly Company for $80,000. The purchase was made at book value. Additional information for Fairly Company follows: Year Net Income Dividends Paid 2017 $20,000 $24,000 2018 60,000 42,000 ? On Fargo’s books, what would be the balance of Investment in Fairly Company at December 31, 2018? a. $104,000 b. $63,400 c. $84,200 d. $60,200 83.Which of the.
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101.On July 1, Sleepy, Inc. purchased 100 of Rabbit Co.'s 6%, $1,000 bonds. The bonds, which pay interest on March 1 and September 1, were purchased at 102 plus accrued interest to yield 4%. The investment was classified as held-to-maturity securities. Effective interest amortization is used.Required:Prepare journal entries for a. July 1 b. September.
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41.When selecting the appropriate accounting for held-to-maturity securities, the company must a.never sell the equity instrument before maturity. b.never sell the debt instrument before maturity. c.have the intent and ability to hold the equity investment to maturity. d.have the intent and ability to hold the debt instrument to maturity. 42.The generally accepted accounting principles for.
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11.An investment of 20% or more in the outstanding common stock of an investee company leads to the presumption of that the investor has significant influence and requires the investor to use the consolidation method. a.True b.False 12.Under U.S. GAAP investments are classified into three categories based upon management’s intent. IFRS also divides.
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21.The costs associated with purchased goodwill are capitalized and amortized over a period not to exceed 20 years. a.True b.False 22.Purchased goodwill is the difference between the acquisition price of an acquired company and the fair value of its identifiable net assets. a.True b.False 23.Goodwill is tested for impairment only within the context of its reporting.
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52.When low-cost depreciable assets with similar characteristics, service lives, and residual values are acquired, which depreciation method should be used? a. composite depreciation b. impairment depreciation c. group depreciation d. such assets should not be depreciated 53.A company purchased ten delivery vehicles at a cost of $20,000 each and used the group depreciation method. Which of the following entries.
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120.Boggs Company is looking to purchase the Grafton Company below is their balance sheet at December 31, 2015. Boggs Company is looking to purchase the Grafton Company for $150,000 cash. The fair value of their equipment is $35,600, the fair value of their inventory is $20,000, their accounts receivable fair value.
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62.Which one of the following statements is true? a. Financial statement readers cannot determine whether the depreciation method used by a company is appropriate. b. Financial statement readers can determine the useful lives of assets depreciated during the reported period. c. Financial statement readers cannot determine the depreciation expense for the reported period. d. Financial statement readers can.
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1.Significant influence of another company generally occurs when the investor owns between 25% and 45%. Due to this relationship the investor is required to issue consolidated financial statements. a.True b.False 2.When the investor owns more than 50% of the voting common stock of the investee, the investee is considered to be under the.
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