Horton Stores exchanged land and cash

Horton Stores exchanged land and cash of $5,000 for similar land. The book value and the fair value of the land were $90,000 and $100,000, respectively.  Assuming that the exchange lacks commercial substance, Horton would record land-new and a gain/(loss) of:
Land
Gain (loss)
a.
$105,000
$0
b
$105,000
$10,000
c
$95,000
$0
d.
$95,000
$10,000

Option a

Option b

Option c

Option d
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QUESTION 2

Simpson and Homer Corporation acquired an office building on three acres of land for a lump-sum price of $2,400,000. The building was completely furnished. According to independent appraisals, the fair values were $1,300,000, $780,000, and $520,000 for the building, land, and furniture and fixtures, respectively. The initial values of the building, land, and furniture and fixtures would be:

Building    Land    Fixtures
a. $1,300,000 $780,000 $520,000
b $1,200,000 $720,000 $480,000
c $720,000 $1,200,000 $480,000

Option a

Option b

Option c

None of the above.
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QUESTION 3

Under International Financial Reporting Standards which of the following is true?:

Research expenditures are expensed in the period incurred.

Development expenditures are capitalized if certain criteria are met.

Both 1 and 2 are true.

Both 1 and 2 are false.
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QUESTION 4

Horton Stores exchanged land and cash of $5,000 for similar land. The book value and the fair value of the land were $90,000 and $100,000, respectively.  Assuming that the exchange has commercial substance, Horton would record land-new and a gain/(loss) of:
Land
Gain (loss)
a.
$105,000
$0
b
$105,000
$10,000
c
$95,000
$0
d.
$95,000
$10,000

Option a

Option b

Option c

Option d
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QUESTION 5

Holiday Laboratories purchased a high-speed industrial centrifuge at a cost of $420,000. Shipping costs totaled $15,000. Foundation work to house the centrifuge cost $8,000. An additional water line had to be run to the equipment at a cost of $3,000. Labor and testing costs totaled $6,000. Materials used up in testing cost $3,000. The capitalized cost is:

$455,000

$446,000

$437,000

$435,000
2 points   Save Answer
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