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Acc 422 final exam

acc 422 final exam

Question 12

Pearl Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $459,900. The estimated fair values of the assets are land $87,600, building $321,200, and equipment $116,800. At what amounts should each of the three assets be recorded? (Round intermediate percentage calculations to 5 decimal places e.g. 18.25124 and final answers to 0 decimal places, e.g. 5,275.)

Recorded Amount
Land
$

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Building
$
Equipment
$

 

Question 16

Concord Company owns equipment that cost $1,125,000 and has accumulated depreciation of $475,000. The expected future net cash flows from the use of the asset are expected to be $625,000. The fair value of the equipment is $500,000.

Prepare the journal entry, if any, to record the impairment loss. (If no entry is required, select “No entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation
Debit
Credit

 

 

Question 17

Pina Corporation purchases a patent from Blossom Company on January 1, 2017, for $59,000. The patent has a remaining legal life of 16 years. Pina feels the patent will be useful for 10 years. Assume that at January 1, 2019, the carrying amount of the patent on Pina’s books is $47,200. In January, Pina spends $24,000 successfully defending a patent suit. Pina still feels the patent will be useful until the end of 2026.

Prepare the journal entries to record the $24,000 expenditure and 2019 amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

Account Titles and Explanation
Debit
Credit
(To record expenditure of patents)
(To record amortization expense)

 

 

Question 22

Sarasota Inc. is involved in a lawsuit at December 31, 2017.
Prepare the December 31 entry assuming it is probable that Sarasota will be liable for $954,500 as a result of this suit. (If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date
Account Titles and Explanation
Debit
Credit
December 31, 2017
Prepare the December 31 entry, if any, assuming it is not probable that Sarasota will be liable for any payment as a result of this suit. (If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date
Account Titles and Explanation
Debit
Credit
December 31, 2017

 

Question 23

Flounder Factory provides a 2-year warranty with one of its products which was first sold in 2017. Flounder sold $1,024,400 of products subject to the warranty. Flounder expects $128,520 of warranty costs over the next 2 years. In that year, Flounder spent $74,030 servicing warranty claims. Prepare Flounder’s journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. (If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date
Account Titles and Explanation
Debit
Credit
During 2017
2017
12/31/17

 

Question 29

On June 30, 2018, Falk Co. sold equipment to an unaffiliated company for $2,000,000. The equipment had a book value of $1,080,000 and a remaining useful life of 10 years. That same day, Falk leased back the equipment at $12,000 per month for 5 years with no option to renew the lease or repurchase the equipment. Falk’s rent expense for this equipment for the year ended December 31, 2018, should be

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