1. Goodwill may be recorded when

A. it is identified within a company.

b. One company acquires another in a business combination.

C. the fair value of a companys assets exceeds their cost.

D. a company has exceptional customer relations.

2. The original cost of an inventory item is above the replacement cost and the net realizable value. The replacement cost is below the net realizable value less the normal profit margin. As a result, under the lower-of-cost-or-market method, the inventory item should be reported at the

A. net realizable value.

B. net realizable value less the normal profit margin.

C. replacement cost.

D. original cost.

3. Land was purchased to be used as the site for the construction of a plant. A building on the property was sold and removed by the buyer so that construction on the plant could begin. The proceeds from the sale of the building should be

A. classified as other income.

B. deducted from the cost of the land.

C. netted against the costs to clear the land and expensed as incurred.

D. netted against the costs to clear the land and amortized over the life of the plant.

4. A company is constructing an asset for its own use. Construction began in 2020. The asset is being financed entirely with a specific new borrowing. Construction expenditures were made in 2020 at the end of each quarter. The total amount of interest cost capitalized in 2020 should be determined by applying the interest rate on the specific new borrowing to the

A. total accumulated expenditures for the asset in 2020 and 2021.

B. weighted-average accumulated expenditures for the asset in 2020.

C. weighted-average expenditures for the asset in 2021.

D. total expenditures for the asset in 2021.

5. The most common method of recording depletion for accounting purposes is the

A. percentage depletion method.

B. decreasing charge method.

C. straight-line method.

D. units-of-production method.

6. UAE Football Co. had a player contract with Messi that is recorded in its books at $8,400,000 on July 1, 2021. Sharjah Football Co. had a player contract with Rami that is recorded in its books at $10,500,000 on July 1, 2021. On this date, UAE traded Messi to Sharjah for Rami and paid a cash difference of $1,050,000. The fair value of the Rami contract was $12,600,000 on the exchange date. The exchange had no commercial substance. After the exchange, the Rami contract should be recorded in UAE's books at

a. $9,450,000.

b. $10,500,000.

c. $11,550,000.

d. $12,600,000.

7. On January 2, 2021, Dubai Corp. replaced its Conditions system with a more efficient one. The following information was available on that date:

Purchase price of new system $150,000

Carrying amount of old system 10,000

Fair value of old system 4,000

Installation cost of new system 20,000

The old system was sold for $4,000. What amount should Dubai capitalize as the cost of the new system?

a. $170,000.

b. $164,000.

c. $160,000.

d. $150,000.