al cost of Asset 1 (the new production machine is a) $100,000 b) 5106,500 c) S11

Question

al cost of Asset 1 (the new production machine is a) $100,000 b) 5106,500 c) S112.800 d) S117,300 e) S118,800 13) The journal entry recording the purchase of Asset 2 (the new photocopier) will wwolve s a) Debit to the Asset's cost account for $225,0oo b) Debit to the Asset's cost account for $215,000 c) Credit to Common Shares for $225,000 d) Both (a) and (c) e) Both (b) and (c) 14) The acquisition of Asset 3 (the new delivery truck) can best be described as: a) A monetary transaction. b) A non-monetary transaction with commercial substance. c) A non-monetary transaction with no commercial substance. d) Cash purchase of a capital asset. c) Credit purchase of a capital asset. 15) The journal entry recording the transaction to acquire Asset 3 (the new delivery truck will involve a: a) Debit to New Truck for $65,000 and SO gain (loss) in the income statement. b) Debi c) Removing a net book value of $60,000 "off the books" related to the Old Truck. d) Both (a) and (c) e) Both (b) and (c) it to New Truck for $75,000 and $10,000 gain in the income statement. a) The purchase is a lump sum (basket) purchase. b) The land and building will be valued at 35% and 65% of the total consideration pro 16) Which of the following statements about the acquisition of Assets 4 & 5 are true: c) The land and building will be recorded at their current fair market values. d) The transaction will result in a gain on acquisition being recorded in the income the seller $250,000. Both (a) and (b) e)

Explanation / Answer

Q.12: Answer is c

  

Q 13. Answer is d

Since the value of the shares issued is $225,000 (9,000 x $25) the value of the asset II will be $225,000.

Q14. Answer is a.

Since there is a payment of cash for the transaction, it is a monetory transaction.

Q.15. Answer is e.

16. Answer is e.

  

Purchase cost 100000 Non returnable provisional tax paid 6300 Freight and insurance paid 1800 Cost of installing equipment 2700 Calibration costs to test the equipment before its first use 2000 Capital cost of the equipment 112800

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