The Correct Answer Is $40,000, Which Is Not Among the Choices, Here Are the Calculations

8.On June 30, 2007, Hi-Tech Inc. purchased for cash at $50 per share all 150,000 shares of outstanding common stock of skicraft Company. Skicrafts balance sheet at June 30, 2007,
Showed net assets with a book value of $6,000,000. The fair value of Skicraft´s property, plant, and equipment on June 30, 2007, was $800,000 in excess of its book value. What amount, if any, will Hi-Tech record as goodwill on the date of purchase?
A.$0&nbs p;C $800,000
B.$700,000&nb sp;D $1,500,000
9.Peyton Company started construction of a new office building on January 1, 2007, and moved into the finished building on July 1, 2008. Of the building $5,000,000 total cost, $4000,000 was incurred in 2007 evenly throughout the year . Peyton incremental borrowing rate was 12 percent throughout 2007, and the total amount of interest incurred by Peyton during 2007 was $204,000. What amount should Peyton report as capitalized interest at December 31, 2007
A.$480,000 ; C. $240,000
B.& nbsp;$300,000D. $204,000
10.In October 2007, Daryl Company exchanged a used packaging machine having a book value of $240,000 for a dissimilar new machine with a market value of $310,000. The company paid a cash difference of $30,000. The market value of the used packaging machine was determined to be $250,000. In its income statement for the year ended December 31, 2007, How much gain should Daryl recognize on this exchange?
A.$0&nbs p;C. $4,500
B.$4,700&nbs p;D. 4,300

The correct answer is $40,000, which is not among the choices, here are the calculations:

Book Value of the machine = $240,000

Cost of New Machine = $310,000

Difference = $310,000 - $240,000

= $70,000

Cash Difference Paid = $30,000

Gain recognized = $70,000 - $30,000

= $40,000
11.Luther Soaps purchases a machine on January 1, 2007 , for $18,000 cash. The machine has an estimated useful life of four years and a salvage value of $4,700. Luther uses the double-declining-balance method of depreciation for all its assets. What will be the machines book value as of December 31, 2008?
A.$5,100& nbsp;C. $4,500
B.$4,700&nb sp;D. $4,300
12.A company using the group depreciation method for its delivery trucks retired one of its delivery trucks after the average service life of the group was reached. Cash proceeds were received from a salvage company. The net carrying amount of these group asset accounts would be decreased by the
A.original cost of the truck
B.original cost of the truck less the cash proceeds
C.cash proceeds received.
D.Cash proceeds received and original cost of the truck
13. On January 1, 2007, Mackay, Inc . spent $80,000 to acquire a trademark . The trademark has a legal life of costs associated with an internally developed trademark. The trademark has an indefinite legal life as long as its used , and as of the end of 2007 Mackay had no reason to assume this wouldn’t be the case. However , they expected that the trademark had an economic life of only 10 years. The trademark wasn’t impaired in any way. If Mackay wishes to maximize current period income with the respect to its amortization of trademark, how much expense should it recognize in 2007?
A.$0&n bsp;C. $8,000
B.& nbsp;$2,000D. $80,000
14.Which of the following reasons provides the best theoretical support for accelerated depreciation?
A.Assets are more efficient in early years and initially generate more revenue.
B.Expenses should be allocated in a manner that ´´smooths´´ earrings
C. Repairs and maintenance costs will probably increase in later periods, so depreciation should decline
D.Accelerated depreciation provides easier replacement because of the time value of the money&n bsp;
15.Eagle Company owns a tract of land that it purchased in 2004 for $200,000. The land is held as a future plan site and has a fair market value of $280,000 on July 1, 2007. On this date, Eagle exchanged its land and paid $100,000 cash for the land owned by Hall.
At what amount should Eagle record the land acquired in the exchange
A.$280,000C. $320,000
B.$ 300,000D. $380,000
16.On January 1, 2006, Carson Company purchased equipment at a cost of $420,000. The equipment was estimated to have a useful life of five years and a salvage value of $60,000.
Carson uses the sum-of-the-years-digits method of depreciation. What should the accumulated depreciation be at December 31, 2008?

A. $240,000 C. $336,000

B. $288,000D. $360,000

17. On October 1, Takei, Inc exchanged 8,000 shares of its $25 par value common stock for a parcel of land to be held for a future plant site. Takeis common stock had a fair market value of $80 per share on the exchange date. Takei received $36,000 from the sale of scrap when an existing building on the site was razed. The land should be carried at
A.$200,000&nbs p;C. $604,000
B.236,000 ;D. 640,000
18.The Oscar corporation acquired land, buildings, and equipment from a bankrupt company at a lump-sum price of $180,000. At the time of acquisition, Oscar paid $14,000 to have the assets appraised. The appraisal disclosed the following values:
Land$120,000
Building80,000
Equipment40,000
What cost should be assigned to the land, buildings, and equipment, respectively?
A.$64,000, $64,000 and $64,000C. $96,000, $64,000 and $32,000
B.$90,000, $60,000 and $30,000D. $120,000 $80,000 and $40,000
19.A company owns a piece of land that originally cost 10,000 and has a fair market value of $8,000. Its exchanged along with $5,000 cash for another piece of land having a fair value of $13,000. What is the proper journal entry to record this transaction?
A.Land (new) $15,000
Land (old) ;$10,000
Cash ;5,000
B.Land (new) $13,000
Loss on Exchange 2,000
Land& nbsp; $10,000
Cash& nbsp;5,000
C.Land (new)$18,000
Land (old)&n bsp;$10,000
Cash&nb sp;5,000
Gain on Exc hange 3,000
D.Land (new)$13,000
Retained Earnings2,000
Land (old)&nb sp;$10,000
Cash 5,000
20.In January 2007, Vance Mining Corporation purchased a mineral mine for $7,200,000 with removable ore estimated by geological surveys at 4,320,000 tons. The Property has an estimated value of $720,000 after the ore has been extracted. Vance incurred $2,160,000 of development costs preparing the property for the extraction of ore. During 2007, 540,000 tons were removed and 480,000 tons were sold. For the year ended December 31, 2007, Vance should include what amount of depletion in its cost of goods sold?
A.$720,000& nbsp;C. $960,000
B.$810,000 ; D. $1,080,000