WGU D104 Intermediate Accounting II Pre-Assessment 1 Units 2-3-Solved 100%

When can interest costs for an asset be capitalized? - ANSWER-When assets are being prepared for its intended use Which method should be used to handle indirect costs of self-constructed assets? - ANSWER-Assigning a pro rata portion of all overhead to the asset A company purchases land for development into a subdivision. The land has a factory building on it that will need to be demolished. Where should the interest costs be allocated? - ANSWER-Cost of the land In which situation can capitalization of interest be included in the cost of land? - ANSWER-When purchasing land with the intension of developing it for lots sales Which item is an asset's involuntary conversion? - ANSWER-Condemnation of property Which description accurately characterizes intangible assets? - ANSWER-They lack physical substance. Company X replaced its packaging machine with a more efficient one. The old packaging machine was sold for $5,000. The following information was available on the date of the replacement: Purchase price of new packaging machine: $145,000Carrying amount of old packaging machine: $15,000Fair value of old packaging machine: $4,000Installation cost of new packaging machine: $25,000 Which amount should Company X capitalize as the cost of the new packaging machine? - ANSWER-$170,000 $145,000 + $25,000 A company purchases land and a building for $400,000 in a lump sum transaction. How should these assets be valued? - ANSWER-Use the relative fair market values of each asset Which annual test is performed for indefinite life intangible assets? - ANSWER-Impairment Which value should be used to record machinery that was purchased with a long-term note? - ANSWER-Present value of the future payments A company's accountant makes a year-end adjusting entry to account for the amortization of a patent. Which account is credited to recogniz