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19. A plant site donated by a city to Rupp Company, which plans to open a new factory, should be recorded on Rupp's books at (Points: 4) the nominal cost of taking title to it its fair market value zero value, but footnoted the value assigned to it by the company's directors 20. The president of Reindeer Corporation donated a building to Monday Corporation. The building had an original cost of $500,000, a book value of $175,000, and a fair market value of $250,000. To record this donation, Monday will (Points: 4) make a memorandum entry debit building for $175,000 and credit gain for $175,000 debit building for $250,000 and credit gain for $250,000 debit building for $500,000 and credit gain for $500,000 21. Which one of the following statements is not a disclosure requirement for depreciation? (Points: 4) the balance of major classes of depreciable assets a general description of the method(s) used for depreciation the accumulated depreciation for each major class of depreciable asset the useful lives for each major class of depreciable asset 22. Which one of the following statements is not true regarding depreciation? (Points: 4) It is a systematic, rational method of allocating the cost of an asset over its useful life. It attempts to match the costs of acquiring an asset to the benefits to be derived from the asset. It does not attempt to measure the value of the asset. It provides funds for the replacement of the asset through tax savings over the asset's life. 23. Related to account for the impact of inflation on fixed assets, GAAP requires (Points: 4) management‚s discretion use of current dollars dollars realized in future periods GAAP is silent on the issue 24. Which one of the following statements is true? (Points: 4) One objective of depreciating an asset is to provide funds for replacement. GAAP requires the use of either straight-line or declining-balance depreciation. Straight-line depreciation results in a decreasing rate of return on total assets. Typically, the sum-of-the-years'-digits method will result in less depreciation expense in the year of acquisition than will the double-declining-balance method. 25. Weaver Co. purchased $40,000 of equipment with a salvage value of $5,000 and a useful life of nine years on August 15, 2010. If the company used sum-of-the-years'-digits depreciation computed to the nearest whole year, depreciation expense for 2011 was (Points: 4) $6,222 $7,000 $7,111 $8,000 26. When low-cost depreciable assets with similar characteristics, service lives, and residual values are acquired, which depreciation method should be used? (Points: 4) composite depreciation impairment depreciation group depreciation such assets should not be depreciated 27. Which statement regarding goodwill is true? (Points: 4) Goodwill is an unidentifiable intangible asset. Internally developed goodwill should be capitalized while purchased goodwill should be expensed. Goodwill can be defined as the value attached to the ability of a company to earn a higher than normal rate of return on the book value of its identifiable assets. In some situations, GAAP requires that negative goodwill be recorded. 28. The Fallen Company began business early in 2010, when Fallen paid an initial fee of $100,000 to purchase a franchise. In forming the company, Fallen also spent $11,000 on legal fees and $4,500 on accounting fees. During the year, Fallen spent $7,500 on product development and paid $10,000 in continuing franchise fees. What amount should Fallen capitalize for intangible assets in 2010? (Points: 4) $100,000 $115,500 $123,000 $133,000 29. The amortization period for a patent is (Points: 4) indefinite; patents should be reviewed for impairment annually 20 years 20 years or the expected useful life of the patent, whichever is longer 20 years or the expected useful life of the patent, whichever is shorter 30. In January 2010, the Remy Corporation purchased a patent for $231,000 from Nel Company that had a remaining legal life of 14 years. Remy estimated that the remaining economic life would be seven years. In January 2014, the company incurred $30,000 in legal costs to defend the patent from an infringement. Remy‚s lawyers were successful, and the remaining years of benefit from the patent were estimated to be six years. The patent amortization expense for 2014 is (Points: 4) $7,615 $9,923 $16,500 $21,500

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