Financial Accounting IFRS Chapter 1

If a corporation purchases a lot and building and subsequently tears down the buiding and uses the property as a parking lot, the proper accounting treatment of the cost the buiding would depend on

• a. the intention of management for the property when the building was acquired

• b. the significance of the cost allocate to the building in relation to the combined cost of the lot and building

• c. the contemplated future use of the parking lot

• d. the length of time for which the building was held prior to its demolition

Gutierrez Company is constructing a building. Construction began in 2022 and the building was completed 12/31/22. Gutierrez made payments to the construction company of 1,500,000 on 7/1, 3,300,000 on 9/1, and 3,000,000 on 12/31. Average accumulated expenditures were

• a. 1,850,000

• 7,800,000

• c. 4,800,000

• d. 1,575,000

Colt Football Co. had a player contract with Watts that is recorded in its books at 3,600,000 in July 1, 2022. Day Football Co. had contract with Kurtz that is recorded in its books at 4,500,000 in july 1, 2022. On this date, Colt traded Watts to Day for Kurtz and paid a cash differnece of 450,000. The fair value of the Kurtz contract was contract should be recorded in Colt's books at

• a. 5,400,000

• b. 4,050,000

• c. 4,500,000

• d. 4,950,000

Fences and parking lots are reported on the statement of financial position as

• a. land

• b. current assets

• c. land improvements

• d. property and equipment

Land was purchased to be used as the site for the construction of a plant. A building on the property was sold and removed by the buyer so that construction on the plant could begin. The proceeds from the sale of the building should be

• a. netted against the costs to clear the land and expensed as incurred

• b. deducted from the cost of the land

• c. classified as other income

• d. netted against the costs to clear the land and amortized over the life of the plant

La Bianco Company purchased land for a manufacturing facility for 1,100,000. The company paid 70,000 to tear down a buillding on the land. Salvage was sold for 10,500 leagal fees of 6,500 were paid for the title investigation and making the purchase. Architect's fees were 40,500. Title insurance cost 4,500 and liability insurance during construction cost 13,500. Excavation cost 12,000. The contractor was paid 1,357,000. A one time assessment made by the city for sidewalks was 7,500. La Bianca installed lighting and signage at a cost of 11,000. The cost of the building that should be recorded by La Bianca is

• a. 1,423,000

• b. 1,357,000

• c.1,432,000

• d. 1,505,500

On January 2, 2022, York Corp. replaced its boiler with a more efficient one. The following information was available on that date: Purchase price of the new boiler 150,000; Carrying amount of old boiler 10,000; Fair value of old boiler 4,000; installation cost of new boiler 20,000. The old boiler was sold for 4,000. What amount should York capitalize as the cost of the new boiler?

• a. 170,000

• b. 150,000

• c. 166,000

• d. 160,000

Menderhall Corporation constructed a building at a cost of 10,000,000. Average accumulated expenditures were $4,000,000, interest was $600,000, and avoidable interest was $300,000. If the salvage value is $800,000, and the useful life is 40 years, depreciation expense for the first full year using the straight-line method is

• a. 337,500

• b. 257,500

• c. 237,500

• d. 245,000

Huff Co. exchanged non-monetary assets with Sayler Co. No cash exchanged and the exchanged had no commercial subtance. The carrying amount of the asset surrendered by Huff exceeded both the fair value of the asset received and Sayler's carrying amount of that asset. Huff should recognize the difference between the carrying amount of the asset it surrendered and

• a. the fair value of the asset it received as a gain

• b. Salyer's carrying amount of the asset it received as a loss

• c. Salyer's carrying amount of the asset it received as a gain

• d. the fair value of the asset it received as a loss

The debit for a sales tax properly levied and paid on the purchase of machinery preferably would be a charge to

• a. the machinery account

• b. a seperate deferred charge account

• c. accumulated depreciation-machienry

• d. miscellaneous tax expense (which includes all taxes other than those on income)