5.Amazing Race Incorporated has decided to sell its 2-year-old helicopter, which is currently advertised in a local newspaper and online. The price for the helicopter is set at $70,000 whereas a new helicopter is $85,000. An independent appraiser has confirmed that a price of $70k for the used helicopter is reasonable. Management expects to find a buyer within 12 months.

Which of the following is true regarding the potential sale of the helicopter by Amazing Race Incorporated?

Amazing Race should remove the helicopter from its books

None of the other alternatives are correct

Amazing Race Incorporated should show the helicopter on its balance sheet at NRV

Amazing Race Incorporated should continue depreciating the helicopter

Amazing Race Incorporated should ensure the helicopter is the last asset listed on the balance sheet under the heading "Assets".

6.ABC Inc. agrees with Home Renovations Inc. to pay $30,000 in five years for a lawnmower. Interest rates are 8% compounded semi-annually. How much should ABC Inc. debit to capital assets upon making this purchase? Please round to the nearest whole number.

$24,657

$30,000

$20,267

$36,501

$13,896

7.

American Outfitters purchases a company, Canadian Outfitters, for a price of $2M. American Outfitters assets have a market value of $3M. Canadian Outfitters assets have a market value of $1.5M. Canadian Outfitters liabilities have a market value of $30,000. Canadian Outfitters liabilities have a book value of $25,000. American Outfitters liabilities have a market value of $32,000. What is the amount of Goodwill that results from the purchase of American Outfitters of Canadian Outfitters?

$32,000

$0 as goodwill cannot arise from this type of purchase

$532,000

$0 as goodwill only arises when a company purchases a company in the same line of business as its own and this is unknown in this case

$530,000

8.The basket purchase method is:

The same method as the relative sales value method

Used to combine assets into single categories on the balance sheet

Two of the statements in choices A, B, C and D are correct

A method which allocates costs based on the fraction of book value that each component is to the total

Based on estimated values

9.Statfall Ltd. buys a building on April 1, 1995 for $500,000. The building will last for 50 years, but Bigger expects to use the building for 30 years. At the end of 50 years the building will have no disposal value, but is expected to have a $50,000 disposal value at the end of 30 years. Statfall uses the straight-line method of depreciation, The depreciation expense at for the year-ended December 31, 2003 is:

$7,500

None of the above

$9,000

$15,000

$10,000

10.On January 1, 2011, Dexter Corporation purchased a piece of equipment, which is being depreciated on a straight-line basis over a useful life of 5 years, with a residual value of $ 10,000. The equipment's accumulated depreciation account has a credit balance of $70,000 and an adjusted credit balance of $105,000 on January 1, 2013 and December 31, 2013, respectively. The original cost of the equipment is:

$175,000

$105,000

$115,000

None of the other alternatives are correct

$185,000

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