Multiple Choice Question 114

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The following data concerning the retail inventory method are taken from the financial records ofCarla VistaCompany.

Cost

Retail

Beginning inventory

$ 183000

$ 287000

Purchases

890000

1210000

Freight-in

23000

Net markups

80300

Net markdowns

55100

Sales

1294000

The ending inventory at retail should be

$251200.

$306300.

$228200.

Multiple Choice Question 68

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During self-construction of an asset byCrane Company, the following were among the costs incurred:

Fixed overhead for the year

$950000

Portion of $950000 fixed overhead that would

be allocated to asset if it were normal production

75000

Variable overhead attributable to self-construction

45000

What amount of overhead should be included in the cost of the self-constructed asset?

$120000

$ -0-

$75000

Multiple Choice Question 94

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CraneInc. andWildhorseCo. have an exchange with no commercial substance. The asset given up byCraneInc. has a book value of $56500and a fair value of $91500. The asset given up byWildhorseCo. has a book value of $121500and a fair value of $106500. Boot of $26500is received byWildhorseCo.

What amount shouldCraneInc. record for the asset received?

$83000

$106500

$91500

Multiple Choice Question 78

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On September 19, 2017,Vaughn Manufacturingpurchased machinery for $476000. Salvage value was estimated to be $27000. The machinery will be depreciated over eight years using the sum-of-the-years'-digits method. If depreciation is computed on the basis of the nearest full month,Vaughnshould record depreciation expense for 2018 on this machinery of

$102472.

$96660.

$96896.

Multiple Choice Question 95

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Crane Companybought a machine on January 1, 2008 for $804000. The machine had an expected life of 20 years and was expected to have a salvage value of $76000. On July 1, 2018, the company reviewed the potential of the machine and determined that its future net cash flows totaled $407000and its fair value was $295000. If the company does not plan to dispose of it, what shouldCranerecord as an impairment loss on July 1, 2018?

$40700

$126800

$0

Multiple Choice Question 107

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Cullumber Company acquired a patent on an oil extraction technique on January 1, 2017 for $7550000. It was expected to have a 10 year life and no residual value. Cullumber uses straight-line amortization for patents. On December 31, 2018, the future cash flows expected from the patent were $915000 per year for the next 8 years. The present value of these cash flows, discounted at Cullumbers market interest rate, is $4225000. At what amount should the patent be carried on the December 31, 2018 balance sheet?

$7550000.

$6040000.

$7320000.

Multiple Choice Question 121

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January 2, 2015, Wildhorse, Inc. purchased a patent for a new consumer product for $770000. At the time of purchase, the patent was valid for 15 years; however, the patents useful life was estimated to be only 10 years due to the competitive nature of the product. On December 31, 2018, the product was permanently withdrawn from the market under governmental order because of a potential health hazard in the product. What amount should Wildhorse charge against income during 2018, assuming amortization is recorded at the end of each year?

$616000

$462000

$539000

Practice Question 39

Incorrect. Laboratory research aimed at discovery of new knowledge of $4,295,000 plus costs of testing prototype and design modifications of $712,500 totals $5,007,500. Quality control during commercial production, including routine testing of products is not an R&D activity and the purchase of research facilities having an estimated useful life of 20 years with alternative future use in other R&D projects would be capitalized. The company wont account for depreciation expense as R&D in 2017.

Lumberyard Inc. incurred the following costs during the year ended December 31, 2017:

Laboratory research aimed at discovery of new knowledge

$ 4,295,000

Costs of testing prototype and design modifications

712,500

Quality control during commercial production, including routine testing of products

485,000

On December 31, 2017, purchase of research facilities having an estimated useful life of 20 years with alternative future use in other research & development projects

7,360,000

The total amount to be classified and expensed as research and development in 2017 is

$12,367,500.

$5,007,500.

$4,780,000.