ACCY 201 EXAM 2 2026 FINANCIAL
ACCOUNTING PRACTICE SET ANSWERS FULL
SOLUTION
◉ What is the total capitalized cost of land if the purchase price is
$2,500,000 and there are additional costs?
Answer: $2,950,000 (including commissions, taxes, and leveling
costs).
◉ What is included in the capitalized cost of equipment?
Answer: Purchase price, sales tax, transportation, shipping
insurance, and installation costs.
◉ What is the key point regarding tangible assets?
Answer: They are recorded at cost plus all costs necessary to get
them ready for use.
◉ What happens to property taxes for the current period after the
purchase of land?
Answer: They are expensed as incurred.
◉ What is the definition of goodwill in the context of intangible
assets?
,Answer: An intangible asset representing the value of a company's
brand, customer relationships, and other non-physical assets.
◉ What is the treatment for costs incurred to develop a new product
or process?
Answer: They are expensed in the income statement.
◉ What are the costs associated with obtaining a patent developed
internally?
Answer: Only legal and filing fees are capitalized; R&D costs are
expensed.
◉ What is the significance of the balance sheet for Workday, Inc.
regarding long-term assets?
Answer: It provides a partial view of the company's current and
long-term asset structure.
◉ What is a franchise?
Answer: A local outlet that pays for the exclusive right to use the
franchisor's name and sell its products within a specified
geographical area.
◉ How does a franchisee record the initial franchise fee?
Answer: As an intangible asset.
, ◉ What is goodwill in accounting?
Answer: The portion of the purchase price that exceeds the fair
value of identifiable net assets.
◉ When is goodwill reported?
Answer: Only when one company acquires another company.
◉ What is the formula for net assets?
Answer: Net assets = assets acquired less liabilities assumed.
◉ How is goodwill generated internally?
Answer: Through advertising, employee training, and other efforts,
but costs must be expensed.
◉ What was the purchase price for Michael Kors' acquisition of
Jimmy Choo?
Answer: $1.447 billion.
◉ What is the fair value of identifiable net assets for Jimmy Choo?
Answer: $762 million.
ACCOUNTING PRACTICE SET ANSWERS FULL
SOLUTION
◉ What is the total capitalized cost of land if the purchase price is
$2,500,000 and there are additional costs?
Answer: $2,950,000 (including commissions, taxes, and leveling
costs).
◉ What is included in the capitalized cost of equipment?
Answer: Purchase price, sales tax, transportation, shipping
insurance, and installation costs.
◉ What is the key point regarding tangible assets?
Answer: They are recorded at cost plus all costs necessary to get
them ready for use.
◉ What happens to property taxes for the current period after the
purchase of land?
Answer: They are expensed as incurred.
◉ What is the definition of goodwill in the context of intangible
assets?
,Answer: An intangible asset representing the value of a company's
brand, customer relationships, and other non-physical assets.
◉ What is the treatment for costs incurred to develop a new product
or process?
Answer: They are expensed in the income statement.
◉ What are the costs associated with obtaining a patent developed
internally?
Answer: Only legal and filing fees are capitalized; R&D costs are
expensed.
◉ What is the significance of the balance sheet for Workday, Inc.
regarding long-term assets?
Answer: It provides a partial view of the company's current and
long-term asset structure.
◉ What is a franchise?
Answer: A local outlet that pays for the exclusive right to use the
franchisor's name and sell its products within a specified
geographical area.
◉ How does a franchisee record the initial franchise fee?
Answer: As an intangible asset.
, ◉ What is goodwill in accounting?
Answer: The portion of the purchase price that exceeds the fair
value of identifiable net assets.
◉ When is goodwill reported?
Answer: Only when one company acquires another company.
◉ What is the formula for net assets?
Answer: Net assets = assets acquired less liabilities assumed.
◉ How is goodwill generated internally?
Answer: Through advertising, employee training, and other efforts,
but costs must be expensed.
◉ What was the purchase price for Michael Kors' acquisition of
Jimmy Choo?
Answer: $1.447 billion.
◉ What is the fair value of identifiable net assets for Jimmy Choo?
Answer: $762 million.
