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A company acquired a new piece of equipment on January 1, 2009 at a cost of $200,000. The equipment is expected to have a useful life of 10 years, a residual value of $20,000 and is depreciated on a straight-line basis. On January 1, 2011, the equipment was appraised and determined to have a fair value of $190,000 and a residual value of $25,000 and a remaining useful life of 10 years.

 

At what amount should the equipment be reported on the December 31, 2011 balance sheet under U.S. GAAP?

A.            $160,000

B.            $150,000

C.            $146,000

D.            $140,000

E.            $116,000

 

52. At what amount should the equipment be reported on the December 31, 2011 balance sheet under the IFRS cost model?

A.            $160,000

B.            $150,000

C.            $146,000

D.            $140,000

E.            $116,000

 

53. At what amount should the equipment be reported on the December 31, 2011 balance sheet under the IFRS revaluation model?

A.            $190,000

B.            $173,500

C.            $165,000

D.            $136,000

E.            $110,000

 

  54. A company incurs research and development costs of $200,000 in 2011 of which $50,000 of these costs relate to development activities because certain criteria have been met which suggest that an intangible asset has been created.

What amount should be recognized as research and development expense in 2011 using U.S. GAAP?

A.            $50,000.

B.            $150,000.

C.            $200,000.

D.            $0.

E.            $250,000.

 

55. What amount should be recognized as research and development expense in 2011 using IFRS?

A.            $50,000.

B.            $150,000.

C.            $200,000.

D.            $0.

E.            $250,000.

 

56. As a result of research and development costs, what is the difference in income between reporting using U.S. GAAP and IFRS in 2011?

A.            U.S. GAAP income is $50,000 higher.

B.            U.S. GAAP income is $50,000 lower.

C.            IFRS income is $50,000 lower.

D.            IFRS income is $150,000 lower.

E.            IFRS income is $150,000 higher.

Due to higher research and development costs under IFRS, income under GAAP will be higher.

A company sells a building to a bank in 2011 at a gain of $100,000 and immediately leases the building back for period of five years. The lease is accounted for as an operating lease. The building was originally purchased for $200,000 and currently had a book value of $50,000 at the date of the sale.

 57. What amount should be recognized in 2011 as a gain on the sale using U.S. GAAP?

A.            $20,000.

B.            $50,000.

C.            $100,000.

D.            $150,000.

E.            $200,000..

 

58. What amount should be recognized as a gain in 2011 using IFRS?

A.            $20,000.

B.            $50,000.

C.            $100,000.

D.            $150,000.

E.            $200,000.

 

59. As a result of the sale and leaseback transaction in 2011, what is the difference between income using U.S. GAAP and IFRS in 2011?

A.            U.S. GAAP income is $80,000 higher.

B.            U.S. GAAP income is $100,000 higher.

C.            IFRS income is $50,000 lower.

D.            IFRS income is $100,000 lower.

E.            IFRS income is $80,000 higher.

 

60. As a result of the sale and leaseback transaction in 2011, what is the difference between income using U.S. GAAP and IFRS in 2012?

A.            $0.

B.            U.S. GAAP income is $20,000 higher.

C.            IFRS income is $80,000 lower.

D.            IFRS income is $60,000 lower.

E.            IFRS income is $80,000 higher.

 

61. Assume the seller of the building is a U.S. company that is preparing to convert from U.S. GAAP to IFRS. At December 31, 2012, with regard to the sale and leaseback accounting, what amount would reconcile stockholders equity from U.S. GAAP to IFRS at December 31, 2012?

A.            Increase $40,000.

B.            Decrease $40,000.

C.            Decrease $60,000.

D.            Increase $60,000.

E.            No amount would be necessary for reconciliation.

 

 

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