125930

Accounting 101 Chapter 7 record an expenditure as an expense. 1- The term capitalize means to T F 2. Cash received from the sale of salvaged materials increases the total recorded cost of the land. O P 3, Most of the costs associaed with intermally developed intangible assets are recorded as intangible assets on the balance sheet. T F 4. Goodwill is recorded as an intangible asset on the balance sheet only when it is purchased as part of the acquisition cost of another company. TF . Book value is equal to the original cost of the asset less the total balance in accumulated T F6. Impairment occurs when the future cash flows generated for a long-term asset fall below ion. its fair value. 7. Circle Co purchased a piece of equipment by paying $10,000 cash. There was a shipping cost of $1,200 and a renovation cost of $3,200 to the building to get the space ready for the installation. There was also an installation cost of $1,000. What should be the recorded cost of this piece of equipment? 8. David Inc, incurred the following costs associated with the purchase of a piece of land that it will use to build an office building: Sale price of land Sale of salvaged material on land Demolition of old building on land Ground breaking ceremony refreshments Legal fees to lawyers for the deed $500,000 10,000 1,500 What amount should David Inc. record the land for? 35u o 9. Research and development costs should be: 1. Expensed in the period incurred 2. Expensed in the period they are determined to be unsuccessful 3. Deferred pending determination of success 4. Expensed if unsuccessful, capitalized if successful 10. Northem Lights purchased the entire business of Southern Brights, including all of its assets and liabilities for $700,000. Below is information about Southern Brights: Fair value of assets Fair value ofliabilities $300,000 . Reported Assets Reported Liabilities Net income for the year $50,000 $800,000 $650,000 $250,000 How much Goodwill should be recorded by Northern Lights