Reference no: EM13510669

1. The capitalized cost of equipment excludes:
A. Maintenance.
B. Sales tax.
C. Shipping.
D. Installation.

2. Cantor Corporation acquired a manufacturing facility on four acres of land for a lump-sum price of $8,000,000. The building included used but functional equipment. According to independent appraisals, the fair values were $4,500,000, $3,000,000, and $2,500,000 for the building, land, and equipment, respectively. The initial values of the building, land, and equipment would be:

Bottom	Land	Equipment
A. 4,500,000	3,000,000	2,500,000
B. 4,500,000	3,000,000	500,000
C. 3,600,000	2,400,000	2,000,000
D. None of the above

Option a
Option b
Option c
Option d

3. When selling property, plant, and equipment for cash:
A. The seller recognizes a gain or loss for the difference between the cash received and the fair value of the asset sold.
B.The seller recognizes a gain or loss for the difference between the cash received and the book value of the asset sold.
C.The seller recognizes losses, but not gains.
D. None of the above.

4. Interest is not capitalized for:
A. Assets that are constructed as discrete projects for sale or lease.
B. Assets constructed for a company's own use.
C. Inventories routinely and repetitively produced in large quantities.
D. Interest is capitalized for all of these items.

5. Horton Stores exchanged land and cash of $5,000 for similar land. The book value and the fair value of the land were $90,000 and $100,000, respectively.

Assuming that the exchange has commercial substance, Horton would record land-new at and record a gain/(loss) of:

Land	Gain/Losses
A. 105,000	-
B. 105,000	10,000
C.  95,000	-
D. 95,000	10,000

Option a
Option b
Option c
Option d