Ch. 10 Smartbook Question

An expense in the period incurred

Start-up costs such as legal fees and state filings to incorporate should be treated as:

Original cost(plus other necessary cost)

The initial valuation of purchased intangible assets requires that the intangible asset is recorded at:

Treatment of interest charges Allocation of overhead

The two important accounting issues related to self-constructed assets are

interest charges allocation of overhead

The two important accounting issues related to self-constructed assets are

True

True or false: Start-up costs such as legal fees and state filings to incorporate should be expensed in the period incurred.

manufacturing overhead Direct labor Direct materials

What are the cost components for self-constructed assets

Fair value of the debt or equity security given ( or received whichever is more evident.)

When a company acquires assets by issuing debt or equity securities, the first indicator of fair value is the:

book value of the asset given up

When assets are exchanged and the transaction lacks commercial substance, the asset received is valued at the

Book value of the asset given up

When assets are exchanged and the transaction lacks commercial substance, the asset received is valued at the:

The asset received is valued at book value of the asset given up

When assets are exchanged and the transaction lacks commercial substance, which of the following occurs?

The asset received is valued at the book value of the asset given.

When assets are exchanged and the transaction lacks commercial substance, which of the following occurs?

Lump-sum purchase

When assets are purchased in a group for a single sum, it is referred to as a

When all planning, designing, coding, and testing activities are completed

When does technological feasibility occur in software development?

When all planning, designing, coding, and testing activities are completed and the product meets design specifications

When does technological feasibility occur in software development?

Relators commission related to purchase of building

Which of the following should be included in the cost of buildings?

Fair

When assets are acquired in a non cash transaction, if the fair value of the noncash items given is not clearly evident, then the _____ value of the assets received is used to record the assets.:

Allocation of overhead for lab facilities Equipment in the lab Labor costs of research personnel

Which of the following are included in research and development costs?

Legal fees to obtain the title Purchase price

Which of the following costs should be capitalized in the costs of acquiring a building?

Purchase price Legal fees to obtain title

Which of the following costs should be capitalized in the costs of acquiring a building?

Present value of the equipment or note

A company acquires equipment by signing a note payable. If the note does not bear interest, the company should record the equipment at the:

Present value of the equipment or note.

A company acquires equipment by signing a note payable. If the note does not bear interest, the company should record the equipment at the:

Debit machine at $20,000 Credit Notes Payable $20,000

A company acquires equipment by signing an interest-bearing note payable for $20,000. The interest rate is realistic so the company will record

Present value of the note payable, which is the face amount of the note.

A company acquires equipment by signing an interest-bearing note payable. If the interest rate is realistic, the company will record the equipment at the?

Appraised value of the land

A company issues its equity securities to purchase land. The common stock is not publicly traded. The best indicator of fair value is the

stock( because its publicly traded, if not it would have been the lands FV)

A company issues its equity securities to purchase land. The common stock is publicly traded, and both the value of the stock and the land is known. The best indicator of fair value is the value of the

Purchase price Required filing fees Legal cost to acquire

A purchased intangible is valued at its original cost. Original cost for acquiring a patent would include:

weighted-average expenditures during the construction period.

For capitalization of interest on self-constructed assets, the average accumulated expenditures is the

number of months from incurrence to the end of the construction period.

For capitalized interest on self-constructed assets, weighted-average expenditures is determined by weighting the individual expenditures by the

overhead

For self-constructed assets, the costs incurred include labor, materials, and:

capitalized

Accounting for software is an exception to the general rule to expense research and development costs. Expenditures made after the software is determined to be technologically feasible but before it is ready for commercial production are

Intangible

An asset, other than financial assets, that has no physical substance is called a(n) _________ asset.

Intangible asset

An asset, other than financial assets, that has no physical substance is referred to as a(n):

An expense on the income statement

Because it is difficult to estimate the future value of research and development, FASB requires that research and development costs be treated as:

Asset retirement obligations

Obligations associated with disposition of property, plant, equipment, or natural resources are called

Asset Retirement

Obligations associated with the disposition of property, plant, equipment, and natural resources are called ___________ __________ Obligations.

Fair value

The basic principle for valuing assets in a nonmonetary exchange is to value the asset received at

it is difficult to objectively determine the future benefits.

The FASB requires research and development costs to be expensed because

Mineral deposits Timber tracts

Which of the following are classified as natural resources?

Allocation of indirect costs related to research materials used in the lab salaries of researchers

Which of the following are included in research and development costs?

present value of the note payable, which is the face amount of the note.

A company acquires equipment by signing an interest-bearing note payable. If the interest rate is realistic, the company will record the equipment at the

Lump Sum

Margot Company purchases land, building and equipment for a single purchase price. Margot should account for the purchase as a ______ purchase?

Relator commissions remodeling the building legal fees to obtain title

Which of the following costs should be capitalized in the costs of acquiring a building?

A gain or loss is recognized for the difference between the fair value and the book value of the asset given up.

Which of the following is true regarding a nonmonetary exchange of assets?

Sales tax Freight to deliver the equipment Legal fees to establish title Installation and testing of equipment

Which of the following items should always be capitalized in the cost of equipment?

Purchase price Insurance on equipment during shipping Freight to deliver the equipment to its location Installation and testing of equipment

Which of the following items should be capitalized in the cost of equipment?

Fair

When a company receives an asset from an unrelated party by a donation, the assets are valued at ______ value?

Revenue is recorded (donation of asset)

When a company receives an asset from an unrelated party by a donation, the assets are valued at fair value and:

Intangibles Property, Plant, and Equipment

Long-term assets are typically classified in one of the two categories:

Present value of the note discounted at the market rate.

When an asset is acquired by signing a noninterest-bearing note payable, and the estimated fair value of the asset is not known, the asset should be recorded at the fair value of the note, which is the