Multiple-Choice Questions [20 marks, each carries 2 marks] - Choose the best answer. (1) Temporary earnings are best characterized as: a. Earnings that do not have corresponding cash flows. b. Earnings from non-operating activities. C. d. (2) Earnings that arise from events that are not likely to recur in the foreseeable future. Earnings that do not conform to accounting standards. Vijay Inc. purchased a three-acre tract of land for a building site for $320,000. On the land there was an old building with an appraised fair value of $120,000. The company demolished the old building at a cost of $12,000, but was able to sell the scraps from the demolished building for $1,500. The cost of title insurance was $900 and attorney fees for reviewing the contract were $500. Property taxes paid were $2,750. The capitalized acquisition cost of the land is: a. $334,650. b. $324,150. C. $214,650. d. (3) a. b. C. d. (4) $204,150. Which of the following items is NOT an indicator that an asset may be impaired? Recent price quotes in the used equipment market indicate that the resale value of the equipment has declined dramatically due to the introduction of new technology. Recent maintenance reports indicate that machinery used by an entity in its operations is wearing out at a much higher rate than expected. Market interest rates or other market rates of return on investments have decreased during the period. Cash flows for acquiring the asset or subsequent cash needs for operating or maintaining it, are significantly higher than those originally budgeted. Fryer Co. owns equipment for which it paid $90 million. At the end of 2018, it had accumulated depreciation on the equipment of $27 million. Due to adverse economic conditions, Fryer's management assessed whether an impairment should be recognized for the equipment. The estimated present value of future cash flows is $60 million, and the equipment's fair value less selling costs at that point is $40 million. Fryer Co. will: a. Record no impairment loss on the equipment. b. PROP C. d. Credit $3 million to accumulated depreciation account. Credit $3 million to equipment account. Credit $3 million to accumulated impairment loss account