Which of the following statements about interest costs is correct?
A) interest on money specifically borrowed to finance construction of an asset should be capitalized
B) a proportionate share of all interest incurred during the life of an asset should be capitalized
C) interest cost incurred during construction of an asset can be capitalized
D) no interest should be capitalized
Blythe Company has equipment with an original cost of $150,000 and accumulated depreciation of $40,000. What is the current fair value of the equipment?
A) $150,000
B) $110,000
C) $40,000
D) unable to determine from the information given
When considering how to finance the acquisition of an asset, which of the following statements is true?
A) The amount borrowed should be larger than the cost of the assets acquired.
B) The cash flows generated by the assets should dictate the type of note (noninterest bearing, installment, etc) the company uses to finance the asset.
C) The cash flow required by the type of note used should dictate the type of asset acquired.
D) In order to minimize debt the company should not borrow unless there is no cash to fund the acquisition of the asset.
MMM Inc. had 5,000 shares outstanding on January 1, 2010. MMM Inc. issued 8,000 shares on May 1 and an additional 9,000 shares on August 1, 2010. How many shares will be used to calculated earnings per share (2010).
A) 5,000
B) 14,083
C) 15,225
D) 15,301
E) 22,000
Which of the following statements about interest costs is correct?
A) interest on money specifically borrowed to finance construction of an asset should be capitalized
B) a proportionate share of all interest incurred during the life of an asset should be capitalized
C) interest cost incurred during construction of an asset can be capitalized
D) no interest should be capitalized
Blythe Company has equipment with an original cost of $150,000 and accumulated depreciation of $40,000. What is the current fair value of the equipment?
A) $150,000
B) $110,000
C) $40,000
D) unable to determine from the information given
When considering how to finance the acquisition of an asset, which of the following statements is true?
A) The amount borrowed should be larger than the cost of the assets acquired.
B) The cash flows generated by the assets should dictate the type of note (noninterest bearing, installment, etc) the company uses to finance the asset.
C) The cash flow required by the type of note used should dictate the type of asset acquired.
D) In order to minimize debt the company should not borrow unless there is no cash to fund the acquisition of the asset.
MMM Inc. had 5,000 shares outstanding on January 1, 2010. MMM Inc. issued 8,000 shares on May 1 and an additional 9,000 shares on August 1, 2010. How many shares will be used to calculated earnings per share (2010).
A) 5,000
B) 14,083
C) 15,225
D) 15,301
E) 22,000
Related questions
7. A company receiving a donated asset will record:
a. an increase in revenue
b. an increase in liabilities
c. a decrease in liabilities
d. an increase in revenue and a decrease in liabilities
8. Alamos Co. exchanged equipment and $17,500 cash for similar equipment. The book value and the fair value of the old equipment were $81,800 and $90,300, respectively.
Assuming that the exchange has commercial substance, Alamos would record a gain/(loss) of:
a.$0
b. $8,500
c. $26,000
d. $(8,500)
9. On January 1, 2018, Kendall Inc. began construction of an automated cattle feeder system. The system was finished and ready for use on September 30, 2019. Expenditures on the project were as follows:
| January 1, 2018 | $ | 200,000 | |
| September 1, 2018 | $ | 300,000 | |
| December 31, 2018 | $ | 300,000 | |
| March 31, 2019 | $ | 300,000 | |
| September 30, 2019 | $ | 200,000 | |
Kendall borrowed $750,000 on a construction loan at 12% interest on January 1, 2018. This loan was outstanding throughout the construction period. The company had $4,500,000 in 9% bonds payable outstanding in 2018 and 2019.
Average accumulated expenditures for 2018 was:
a. $300,000
b. $350,000
c. $500,000
d. $400,000
10. On January 1, 2018, Dreamworld Co. began construction of a new warehouse. The building was finished and ready for use on September 30, 2019. Expenditures on the project were as follows:
| January 1, 2018 | $ | 323,000 | |
| September 1, 2018 | $ | 483,000 | |
| December 31, 2018 | $ | 483,000 | |
| March 31, 2019 | $ | 483,000 | |
| September 30, 2019 | $ | 323,000 | |
Dreamworld had $6,100,000 in 15% bonds outstanding through both years.
Dreamworld's capitalized interest in 2018 was:
a. $84,712
b. $48,450
c. $72,600
d. $96,900
11. Software development costs are capitalized if they are incurred:
a. Prior to the point at which technological feasibility has been established.
b. after commercial production has begun
c.After technological feasibility has been established but prior to the product availability date.
d. none of these answers
12.Cebrex Software began a new development project in 2017. The project reached technological feasibility on June 30, 2018, and was available for release to customers at the beginning of 2019. Development costs incurred prior to June 30, 2018, were $3,200,000 and costs incurred from June 30 to the product release date were $1,400,000. The economic life of the software is estimated at four years. For what amount will software be capitalized in 2018?
a. $0
b. $5,600,000
c. $1,400,000
d. $3,200,000
