Question : 127.Owning a patent: A.Gives the owner the exclusive right to publish : 1258931

 

 

127.Owning a patent:   

A.Gives the owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years.

 

B.Gives the owner exclusive rights to manufacture and sell a patented item or to use a process for 20 years.

 

C.Gives its owner an exclusive right to manufacture and sell a device or to use a process for 50 years.

 

D.Indicates that the value of a company exceeds the fair market value of a company’s net assets if purchased separately.

 

E.Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 17 years.

 

 

 

 

128.Holding a copyright:   

A.Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years.

 

B.Gives its owner an exclusive right to manufacture and sell a patented item or to use a process for 20 years.

 

C.Gives its owner an exclusive right to manufacture and sell a device or to use a process for 50 years.

 

D.Indicates that the value of a company exceeds the fair market value of a company’s net assets if purchased separately.

 

E.Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 20 years.

 

 

 

 

129.A leasehold is:   

A.A short-term rental agreement.

 

B.The same as a patent.

 

C.The rights granted to the lessee by the lessor of a lease.

 

D.Recorded as revenue expenditure when paid.

 

E.An asset held as an investment.

 

 

 

 

130.The specific meaning of goodwill in accounting is:   

A.The amount by which a company’s value exceeds the value of its individual assets and liabilities.

 

B.Long term assets held as investment.

 

C.The support of the board of directors for the operating decisions of management.

 

D.The cost of developing, maintaining, or enhancing the value of a trademark.

 

E.Rights granted an entity to deliver a product or service under specified conditions.

 

 

 

 

131.A company’s old machine that cost $40,000 and had accumulated depreciation of $22,000 was traded in on a new machine having an estimated 20-year life with an invoice price of $45,000. The company also paid $33,000 cash, along with its old machine to acquire the new machine. If this transaction has commercial substance, the new machine should be recorded at:    

A.$40,000.

 

B.$33,000.

 

C.$45,000.

 

D.$18,000.

 

E.$51,000.

 

Market value of new machine$45,000

Cost of old machine$40,000

Accumulated depreciation(22,000)

Book value of old machine$18,000

Plus cash paid in exchange33,00051,000

Loss on exchange($6,000)

Therefore the loss on the exchange is recognized and the new machine should be recorded at its price of $45,000.

 

 

 

132.Hunter Sailing Company exchanged an old sailboat for a new one. The old sailboat had a cost of $160,000 and accumulated depreciation of $100,000. The new sailboat had an invoice price of $270,000. Hunter received a trade in allowance of $70,000 on the old sailboat, which meant the company paid $200,000 in addition to the old sailboat to acquire the new sailboat. If this transaction lacks commercial substance, what amount of gain or loss should be recorded on this exchange?    

A.$0 gain or loss.

 

B.$10,000 gain.

 

C.$10,000 loss.

 

D.$60,000 loss.

 

E.$70,000 loss.

 

Market value of new sailboat$270,000

Book value of old sailboat ($160,000 – $100,000)$60,000

Cash200,000260,000

Gain$10,000

As this transaction lacks commercial substance, the $10,000 gain should not be recognized.

 

 

 

133.Cliff Company traded in an old truck for a new one. The old truck had a cost of $75,000 and accumulated depreciation of $60,000. The new truck had an invoice price of $125,000. Huffington was given a $12,000 trade-in allowance on the old truck, which meant they paid $113,000 in addition to the old truck to acquire the new truck. If this transaction has commercial substance, what is the recorded value of the new truck?    

A.$15,000

 

B.$75,000

 

C.$113,000

 

D.$125,000

 

E.$128,000

 

Market value of new truck$125,000

Book value of the old truck ($75,000 – $60,000)$15,000

Cash113,000128,000

Loss$3,000

As the transaction has commercial substance and there is a loss on the exchange, the new asset is recorded at its market value.

 

 

 

134.A company bought new heating system for $42,000 and was given a trade-in of $2,000 on an old heating system, so the company paid $40,000 cash with the trade-in. The old system had an original cost of $37,000 and accumulated depreciation of $34,000. If the transaction has commercial substance, the company should record the new heating system at:    

A.$2,000.

 

B.$3,000.

 

C.$40,000.

 

D.$42,000.

 

E.$43,000.

 

Market value of new case$42,000

Cost of old display case$37,000

Accumulated depreciation(34,000)

Book value of old display case$3,000

Plus cash paid in exchange40,00043,000

Loss on exchange($1,000)

Since the transaction has commercial substance, the loss on exchange is recognized and the new display case should be recorded at its $42,000 price.

 

 

 

135.A company purchased equipment valued at $66,000. It traded in old equipment for a $9,000 trade-in allowance and the company paid $57,000 cash with the trade-in. The old equipment cost $44,000 and had accumulated depreciation of $36,000. This transaction has commercial substance. What is the recorded value of the new equipment?    

A.$8,000.

 

B.$9,000.

 

C.$57,000.

 

D.$65,000.

 

E.$66,000.

 

Market value of new equipment$66,000

Cost of old machine$44,000

Accumulated depreciation(36,000)

Book Value of the old equipment$8,000

Plus cash paid in exchange57,00065,000

Gain on exchange$1,000

Since the transaction has commercial substance, the $1,000 gain is recognized and the new machine is recorded at its market value of $66,000.

 

 

 

136.Which of the following statements regarding increases in the value of plant assets under U.S. GAAP and IFRS is true?    

A.U.S. GAAP allows companies to record increases in the value of plant assets.

 

B.IFRS prohibits upward asset revaluations.

 

C.Under GAAP, a company can reverse an impairment and record that increase in income.

 

D.U.S. GAAP prohibits companies from recording increases in the value of plant assets.

 

E.Under IFRS, an impairment increase beyond as asset’s original cost is not recorded.