Question :
131. Repairs and maintenance do not include A. the costs of restoring an : 1230675
131. Repairs and maintenance do not include
A. the costs of restoring an asset’s service potential after breakdowns
B. expenditures that increase the asset’s life
C. routine costs such as for cleaning and adjusting
D. major tune-ups including labor and parts
E. all of the above
132. During Year 3, Thomas Company made the following expenditures relating to plant machinery and equipment:
·
Continuing, frequent, and low cost repairs
$36,000
·
Special long-term protection devices were attached to ten machines
11,000
·
A broken gear on a machine was replaced
2,000
How much should be charged to repairs and maintenance in Year 3?
A. $36,000
B. $38,000
C. $47,000
D. $49,000
E. none of the above
133. A firm acquires a car for company business. The car costs $12,000, has a useful life of 5 years, and a salvage value of $2,000. The straight-line method of depreciation is used. What is the gain or loss on retirement if the car is sold for $5,000 after three years of use?
A. a gain of $200
B. a loss of $1,000
C. a gain of $1,000
D. a loss of $200
E. a loss of $800
134. Goodwill that was internally developed should be amortized over a life not to exceed
A. 100 years
B. 40 years
C. 20 years
D. 10 years
E. No useful life, as such goodwill is not recorded as an asset
135. Which of the following is not capitalized as an intangible asset?
A. costs of an internally developed patent
B. legal costs to defend a patent successfully
C. goodwill acquired when a company purchases another company
D. costs to purchase a patent
E. none of the above
136. (CMA adapted, Dec 86 #12) A patent is granted by the federal government to an inventor for a period of several years. Costs that are capitalized with regard to a patent would include
A. legal fees of obtaining the patent, incidental costs of obtaining the patent, and costs of successful patent infringement suits
B. legal fees of obtaining the patent, incidental costs of obtaining the patent, and research and development costs incurred on the invention that is patented
C. legal fees of obtaining the patent, costs of successful patent infringement suits, and research and development costs incurred on the invention that is patented
D. legal fees of obtaining the patent, costs of successful and unsuccessful patent infringement suits, and research and development costs incurred on the invention that is patented
E. legal fees of obtaining the patent, costs of successful and unsuccessful patent infringement suits, and development costs incurred on the invention that is patented
137. The Purple Company spent $300,000 on research and development during Year 8 to generate new product lines. One of the three projects resulted in a successful patented product while the other two projects resulted in unsuccessful efforts. How much of the $300,000 should be recognized as an expense in Year 8?
A. $300,000
B. $200,000
C. $150,000
D. $100,000
E. $0
138. The Purple Company spent $300,000 on research and development during Year 8 to generate new product lines. One of the three projects looks like it will ultimately be technologically feasible while the other two projects resulted in unsuccessful efforts. For the project which may become technologically feasible, a total of $125,000 was incurred during Year 8. Under U. S. GAAP, how much of the $300,000 should be recognized as an expense in Year 8?
A. $300,000
B. $225,000
C. $175,000
D. $50,000
E. $0
139. Valley Company reports its net assets at a book value of $150,000. Recent investigation revealed that the net assets had a market value of $175,000. In addition, Valley had been offered $220,000 for the net assets by a company named S.Com. What is the amount of goodwill that should be recorded by Valley Co.?
A. $0
B. $45,000
C. $25,000
D. $70,000
E. $220,000
140. Firms that incur research and development costs to develop a patented product.
A. must expense the costs as incurred
B. must capitalize the costs and only reduce such costs if the patent becomes impaired
C. must capitalize the costs and then amortize the costs over the expected economic life of the patent
D. have a choice either to expense the costs as incurred or capitalize the costs and amortize the costs over the legal life of the patent
E. have a choice either to expense the costs as incurred or capitalize the costs and amortize the costs over the expected economic life of the patent
