Chapter 10 Quiz: Intermediate Accounting ACCT 3201 Spring 2016

Alamos Co. exchanged equipment and $19,000 cash for similar equipment. The book value and the fair value of the old equipment were $81,100 and $91,700, respectively.

Assuming that the exchange lacks commercial substance, Alamos would record a gain/(loss) of:

$ 0.

$(10,600).

$ 10,600.

$29,600.

Below is information relative to an exchange of similar assets by Grand Forks Corp. Assume the exchange has commercial substance.

Old EquipmentCash

                 Book     ValueFair     ValuePaid  

Case A     $50,400    $59,400     $14,300       

Case B     $41,000     $34,100     $ 8,000         

In Case B, Grand Forks would record a gain/(loss) of:

$ 6,900.

$ 1,100.

$(6,900).

$(1,100).

The balance sheets of Davidson Corporation reported net fixed assets of $344,000 at the end of 2016. The fixed-asset turnover ratio for 2016 was 4.0, and sales for the year totaled $1,492,000. Net fixed assets at the end of 2015 were:

$431,000.

$373,000.

$402,000.

None of these answer choices are correct.

Horton Stores exchanged land and cash of $5,600 for similar land. The book value and the fair value of the land were $89,200 and $101,800, respectively.

Assuming that the exchange lacks commercial substance, Horton would record land-new and a gain/(loss) of:

Land     Gain/(loss)

$94,800      $0.

$94,800      $12,600.

$107,400     $12,600.

$107,400     $0.

Axcel Software began a new development project in 2015. The project reached technological feasibility on June 30, 2016, and was available for release to customers at the beginning of 2017. Development costs incurred prior to June 30, 2016, were $3,500,000 and costs incurred from June 30 to the product release date were $1,750,000. The 2017 revenues from the sale of the new software were $4,500,000, and the company anticipates additional revenues of $6,500,000. The economic life of the software is estimated at four years. 2017 amortization of the software development costs would be (Round interim calculations to two decimal places (e.g., .422525 as 42.25%)):  

$0.

$437,500.

$1,312,500.

$715,925.