Q1 -

In 2018, ABC Co. incurred $14,000 of costs to repair Machine A. These expenditures extended the useful life of the asset by 2 years. ABC also spent $12,000 to repair Machine B. These expenditures improved the quality and quantity of output but did not extend the useful life. ABC also spent $1,000 to make a routine replacement of a minor part on Machine C, and $9,000 for regular monthly costs to maintain all the machines in the plant in normal working order. What amount of the foregoing expenditures should be reported as repair and maintenance expense?

1. $36,000
2. $10,000
3. $22,000
4. $9,000

Q2 -

ABC Company will not initially record as income any part of a gain realized on a nonmonetary exchange of plant assets when the exchange has:

1. commercial substance and additional cash is paid by ABC.
2. commercial substance and additional cash is received by ABC.
3. no commercial substance and additional cash is received by ABC.
4. no commercial substance and additional cash is paid by ABC.