Can someone please provide the solutions. No explanation needed,just the answers so I can double check my work.
2. Firms with tangiblelong-term assets and less predictable cash flows, such as automanufacturers and steel companies, whose sales vary with changes ineconomic conditions, tend to use
a.
a more nearly equal mix of long-term debt and shareholdersâequity financing.
b.
a greater amount of long-term debt [80%] than shareholdersâequity financing [20%].
c.
a smaller amount of long-term debt [20%] than shareholdersâequity financing [80%].
d.
a greater amount of long-term debt [80%] than assets [20%].
e.
a greater amount of shareholdersâ equity [80%] than assets[20%].
3. During Year 3,Carrington Company made the following expenditures relating toplant machinery and equipment:
·
Continuing, frequent, and low cost repairs
$46,000
·
Special long-term protection devices were attached to tenmachines
11,000
·
A broken gear on a machine was replaced
5,000
How much should be charged to repairs and maintenance in Year3?
a.
$46,000
b.
$51,000
c.
$57,000
d.
$41,000
e.
none of the above
4. Which of the followingis/are not capitalized as an intangible asset?
a.
costs of an internally developed patent
b.
legal costs to defend a patent successfully
c.
goodwill acquired when a company purchases another company
d.
costs to purchase a patent
e.
none of the above
5. Repairs and maintenancedo not include
a.
the costs of restoring an asset's service potential afterbreakdowns.
b.
expenditures that increase the asset's life.
c.
routine costs such as for cleaning and adjusting.
d.
major tune-ups including labor and parts.
e.
All of the above are not considered to be repairs ormaintenance.
12. Sigma Company suffers a loss to itsbuilding in a fire and spends $100,000 on repairs and improvements.It judges that $80,000 of the expenditure replaces long-livedassets lost in the fire, and $20,000 represents improvements to thebuilding. Which of the following is the single journal entry thatSigma Company will make?
a.
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . 100,000
Cash . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . .. 100,000
b.
Loss from Fire . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 100,000
Cash . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .. 100,000
c.
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . 100,000
Building . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . .. 20,000
Loss from Fire . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . .. 80,000
d.
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 20,000
Loss from Fire . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 80,000
Cash . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .. 100,000
e.
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 100,000
Loss from Fire . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . .. 100,000
16. Firms treat expenditures as assetswhen they:
a.
have acquired rights to the future use of a resource as a resultof a past transaction or event.
b.
can reliably measure the cost of the expected benefits at thetime of initial recognition.
c.
can exercise the entityâs right to, or control of, thebenefit.
d.
can obtain the future service potential and control othersâaccess to it.
e.
all of the above
Clarion Realty
Clarion Realty has decided to construct its own office building.The construction will be partially financed through a constructionloan and any remainder will be financed from internally generatedfunds. The internal accountants have collected the followinginformation concerning the construction.
Average Balance
Construction
Other
Year
Construction Account
Debt @ 6%
Debt @ 10%
1
$2,000,000
$1,000,000
$500,000
2
$4,000,000
$1,000,000
$250,000
3
$3,000,000
$800,000
$200,000
22. The amount, if any, of capitalizedinterest cost for Year 1 is
a.
$0
b.
$50,000
c.
$60,000
d.
$110,000
e.
$170,000
23. The amount, if any, of capitalizedinterest cost for Year 2 is
a.
$0
b.
$50,000
c.
$60,000
d.
$180,000
e.
$230,000
33. When a firm constructs its ownbuildings or equipment:
a.
it recognizes the labor, material, and overhead costs incurredas an asset.
b.
U.S. GAAP and IFRS require firms to include, or capitalize,interest costs during construction in the cost of aself-constructed asset.
c.
it recognizes the labor, material, and overhead costs incurredas a period expense.
d.
U.S. GAAP and IFRS require firms to expense interest costsincurred during construction of a self-constructed asset.
e.
both choices a and b are correct.
Can someone please provide the solutions. No explanation needed,just the answers so I can double check my work.
2. Firms with tangiblelong-term assets and less predictable cash flows, such as automanufacturers and steel companies, whose sales vary with changes ineconomic conditions, tend to use
a. | a more nearly equal mix of long-term debt and shareholdersâequity financing. |
b. | a greater amount of long-term debt [80%] than shareholdersâequity financing [20%]. |
c. | a smaller amount of long-term debt [20%] than shareholdersâequity financing [80%]. |
d. | a greater amount of long-term debt [80%] than assets [20%]. |
e. | a greater amount of shareholdersâ equity [80%] than assets[20%]. |
3. During Year 3,Carrington Company made the following expenditures relating toplant machinery and equipment:
· | Continuing, frequent, and low cost repairs | $46,000 |
· | Special long-term protection devices were attached to tenmachines | 11,000 |
· | A broken gear on a machine was replaced | 5,000 |
How much should be charged to repairs and maintenance in Year3?
a. | $46,000 |
b. | $51,000 |
c. | $57,000 |
d. | $41,000 |
e. | none of the above |
4. Which of the followingis/are not capitalized as an intangible asset?
a. | costs of an internally developed patent |
b. | legal costs to defend a patent successfully |
c. | goodwill acquired when a company purchases another company |
d. | costs to purchase a patent |
e. | none of the above |
5. Repairs and maintenancedo not include
a. | the costs of restoring an asset's service potential afterbreakdowns. |
b. | expenditures that increase the asset's life. |
c. | routine costs such as for cleaning and adjusting. |
d. | major tune-ups including labor and parts. |
e. | All of the above are not considered to be repairs ormaintenance. |
12. Sigma Company suffers a loss to itsbuilding in a fire and spends $100,000 on repairs and improvements.It judges that $80,000 of the expenditure replaces long-livedassets lost in the fire, and $20,000 represents improvements to thebuilding. Which of the following is the single journal entry thatSigma Company will make?
a. | Building . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . 100,000 Cash . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . .. 100,000 |
b. | Loss from Fire . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 100,000 Cash . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .. 100,000 |
c. | Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . 100,000 Building . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . .. 20,000 Loss from Fire . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . .. 80,000 |
d. | Building . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 20,000 Loss from Fire . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 80,000 Cash . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .. 100,000 |
e. | Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 100,000 Loss from Fire . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . .. 100,000 |
16. Firms treat expenditures as assetswhen they:
a. | have acquired rights to the future use of a resource as a resultof a past transaction or event. |
b. | can reliably measure the cost of the expected benefits at thetime of initial recognition. |
c. | can exercise the entityâs right to, or control of, thebenefit. |
d. | can obtain the future service potential and control othersâaccess to it. |
e. | all of the above |
Clarion Realty
Clarion Realty has decided to construct its own office building.The construction will be partially financed through a constructionloan and any remainder will be financed from internally generatedfunds. The internal accountants have collected the followinginformation concerning the construction.
Average Balance | Construction | Other | |
Year | Construction Account | Debt @ 6% | Debt @ 10% |
1 | $2,000,000 | $1,000,000 | $500,000 |
2 | $4,000,000 | $1,000,000 | $250,000 |
3 | $3,000,000 | $800,000 | $200,000 |
22. The amount, if any, of capitalizedinterest cost for Year 1 is
a. | $0 |
b. | $50,000 |
c. | $60,000 |
d. | $110,000 |
e. | $170,000 |
23. The amount, if any, of capitalizedinterest cost for Year 2 is
a. | $0 |
b. | $50,000 |
c. | $60,000 |
d. | $180,000 |
e. | $230,000 |
33. When a firm constructs its ownbuildings or equipment:
a. | it recognizes the labor, material, and overhead costs incurredas an asset. |
b. | U.S. GAAP and IFRS require firms to include, or capitalize,interest costs during construction in the cost of aself-constructed asset. |
c. | it recognizes the labor, material, and overhead costs incurredas a period expense. |
d. | U.S. GAAP and IFRS require firms to expense interest costsincurred during construction of a self-constructed asset. |
e. | both choices a and b are correct. |