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Enter the letter corresponding to the response that best completes each of the following statements or questions.

1
Each of the following would be considered an operational asset except:
A)An oil well.
B)A building.
C)Inventories.
D)A patent.
2
The initial cost of land would include all of the following except:
A)The cost of grading.
B)Title search costs.
C)Recording fees.
D)Property taxes for the current period.
3
The following expenditures relate to machinery purchased by Callabasas Manufacturing:

Purchase price

$16,000

Transportation costs

800

Installation

500

Testing

2,000

Repair of part broken during shipment

300

At what amount should Callabasas capitalize the machinery?
A)$17,300
B)$19,300
C)$19,600
D)$17,600
4
Goodwill is the excess of the purchase price of an acquired company over the:
A)Fair value of the net assets acquired.
B)Sum of the fair values of the assets acquired.
C)Book value of the acquired company.
D)None of the above.
5
The Piazza Baseball Bat Company acquired all of the outstanding common stock of Dierdorf Lumber for $3,500,000. The book values and fair values of Dierdorf's assets and liabilities on the date of purchase were as follows:

Book Value

Fair Value

Current assets

$  860,000

$  830,000

Operational assets

  2,300,000

  2,940,000

Liabilities

  600,000

  600,000

Piazza should record goodwill of:
A)$0
B)$940,000
C)$340,000
D)$330,000
6
Cello Corporation purchased three patents at a total cost of $960,000. The appraised values of the individual patents were as follows:

Patent 1

$600,000

Patent 2

  400,000

Patent 3

  200,000

The costs that should be assigned to Patents 1, 2, and 3, respectively, are:
A)$320,000; $320,000; $320,000.
B)$480,000; $320,000; $160,000.
C)$600,000; $400,000; $200,000.
D)None of the above.
7
The City of San Martin gave a parcel of land to the Canova Company as part of an agreement requiring Canova to construct its office building on the donated land. The land cost the city $80,000 when purchased several years ago and had an appraised value of $200,000 on the date it was given to Canova. As a result of the donation, Canova should record:
A)A debit to land of $80,000.
B)A credit to revenue of $200,000.
C)A credit to paid-in capital of $200,000.
D)A credit to gain of $120,000.
8
Wolf Computer exchanged a machine with a book value of $40,000 and a fair value of $45,000 for a patent. In addition to the machine, $6,000 in cash was given. Wolf should recognize:
A)A gain of $11,000.
B)A loss of $1,000.
C)A gain of $5,000.
D)No gain or loss.
9
Assume the same facts as in question 8, except that the machine is exchanged for a similar machine rather than for a patent. Wolf should recognize:
A)A gain of $11,000.
B)A loss of $1,000.
C)A gain of $5,000.
D)No gain or loss.
10
The Ghirardi Company's fixed-asset turnover ratio for 2009 was 5 and average fixed assets employed during the year were $2,040,000. Ghirardi's net sales for the year were:
A)$408,000.
B)$10,200,000.
C)$12,000,000.
D)None of the above.
11
The specific interest and the weighted-average interest methods for determining capitalized interest will yield the same results except when:
A)Construction debt interest rates differ from the rates of other interest-bearing debt.
B)There is no construction-related debt.
C)There is no interest-bearing debt other than construction related.
D)Construction debt interest rates are the same as the rates of other interest-bearing debt.
12
In January of 2009, the Falwell Company began construction of its own manufacturing facility. During 2009, $6,000,000 in costs were incurred evenly throughout the year. Falwell took out a $2,500,000, 10% construction loan at the beginning of the year. The company had no other interest-bearing debt. What amount of interest should Falwell capitalize in 2009?
A)$0
B)$600,000
C)$300,000
D)$250,000
13
Micro Tech, Inc. made the following cash expenditures during 2009 related to the development of a new technology which was patented at the end of the year:

Materials and supplies used

$ 38,000

R&D salaries

 120,000

Patent filing fees

 3,000

Payments to external consultants

 50,000

Purchase of R&D equipment

 140,000

The equipment purchased has no future use beyond the current project. $10,000 of the materials and supplies used and $32,000 in salaries relate to the construction of prototypes. In its 2009 financial statements Micro Tech should report research and development expenses of:
A)$306,000
B)$348,000
C)$351,000
D)$208,000
14
During 2009, the Balboa Software Company incurred development costs of $2,000,000 related to a new software project. Of this amount, $400,000 was incurred after technological feasibility was achieved. The project was completed in the middle of the year and the product was available for release to customers on July 1. Year 2009 revenues from the sale of the new software were $500,000 and the company anticipated future additional revenues of $4,500,000. The economic life of the software is estimated at four years. Year 2009 amortization of software development costs should be:
A)$40,000
B)$100,000
C)$50,000
D)$200,000





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