A.

Calaveras Tire exchanged equipment for two pickup trucks. The book value and fair value of the equipment given up were $20,000 (original cost of $65,000 less accumulated depreciation of $45,000) and $17,000, respectively. Assume Calaveras paid $8,000 in cash and the exchange has commercial substance.

(1) At what amount will Calaveras value the pickup trucks?
(2) How much gain or loss will the company recognize on the exchange?

B.

A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $500,000; March 31, $600,000; June 30, $400,000; October 30, $600,000. To help finance construction, the company arranged a 7% construction loan on January 1 for $700,000. The companys other borrowings, outstanding for the whole year, consisted of a $3 million loan and a $5 million note with interest rates of 8% and 6%, respectively.

Assuming the company uses the specific interest method, calculate the amount of interest capitalized for the year.

C.

Maxtor Technology incurred the following costs during the year related to the creation of a new type of personal computer monitor:

Salaries $ 220,000

Depreciation on R&D facilities and equipment 125,000

Utilities and other direct costs incurred for the R&D facilities 66,000

Patent filing and related legal costs 22,000

Payment to another company for performing a portion of the development work 120,000

Costs of adapting the new monitor for the specific needs of a customer 80,000

What amount should Maxtor report as research and development expense in its income statement?