1.Real Angus Steakhouse purchased land for $75,000 cash. They also incurred commissions of $4,500, property taxes of $5,000, and title insurance of $800. The $5,000 in property taxes includes $4,000 in back taxes paid by Real Angus on behalf of the seller and $1,000 due for the current year after the purchase date. For what amount should Real Angus Steakhouse record the land?
2.The following financial information is from Cook Company:
Accounts Payable$55,000Land$90,000Inventory$10,500Accounts Receivable$7,500Equipment$8,000Deferred Revenue$58,500Short-term Investments$20,000Notes Receivable (due in 8 months)$45,500Interest Payable$2,000Patents$75,000
What is the amount of intangible assets assuming the accounts above reflect normal activity?
Amortized over the greater of its estimated life or forty years.
Only recorded by the seller of a business.
The value of a business as a whole, over and above the value of its net identifiable assets.
Recorded when created internally through advertising expense.
4.Northern purchased the entire business of Southern including all its assets and liabilities for $600,000. Below is information related to the two companies:
1st amount (top)=Northern Second amount (bottom)2nd=Southern
Fair value of assets
Fair value of liabilities
Net Income for the year
How much goodwill did Northern pay for acquiring Southern?
5.Kansas Enterprises purchased equipment for $60,000 on January 1, 2018. The equipment is expected to have a five-year life, with a residual value of $5,000 at the end of five years.
Using the straight-line method, depreciation expense for 2019 and the book value at December 31, 2019 would be:
$12,000 and $36,000.
$12,000 and $31,000.
$11,000 and $33,000.
$11,000 and $38,000.
6.Abbott Company purchased a computer that cost $10,000. It had an estimated useful life of 5 years and no residual value. The computer was depreciated by the straight-line method and was sold at the end of the fourth year of use for $3,000 cash. Abbott should record:
a gain of $1,000.
a loss of $1,000.
neither a gain nor a loss - the computer was sold at its book value.
neither a gain nor a loss - the gain that occurred in this case would not be recognized.