I need these questions answered and the reasoning behind the answers. Answers are on coursehero
1. In the year ended May 31, 20X5, Hardware
Inc. purchased new machinery from an overseas manufacturer. The cost of
the machine totalled $500,000 plus HST of 12%. Shipping and duties
incurred by the company totalled $35,000. Hardware Inc. needed to bring a
mechanic from overseas to assist with the installation. Costs of
installation totalled $15,000. A rebate of $40,000 was given to Hardware
since this was the company’s second machine purchase from the
manufacturer. Prior to delivery, to prepare for installation of the new
machine, Hardware incurred labour costs of $12,000 and general overhead
of $9,000.
What is the total asset cost that Hardware should record for the new machinery?
a) $510,000
b) $522,000
c) $531,000
d) $582,000
2. Which of the following statements regarding the exchange of non-monetary assets is true?
a) Determining commercial substance for a transaction is based on professional judgment.
b) All non-monetary exchanges of assets are considered incidental to the company’s ordinary business activities.
c) The transaction must have commercial substance in order for the exchange to occur.
d) All transactions will result in a gain or loss being realized.
3.
Evolution Corporation follows the proportional method for revaluation
of its property, plant and equipment. On December 31, 20X3, the company
had land with an original cost of $200,000. One loss has been previously
recorded by Evolution on the land. Market appraisals obtained by
management on December 31, 20X3, show that the fair market value of the
land is now $260,000.
How should Evolution record the revaluation of the land on December 31, 20X3?
a) Credit gain on revaluation of land (P&L) for $80,000
b) Credit gain on revaluation of land (P&L) for $60,000
c) Debit other comprehensive income (OCI) — revaluation surplus for $80,000
d) Credit other comprehensive income (OCI) — revaluation surplus for $60,000
4. Which of the following statements regarding the accounting treatment of intangible assets is true?
a) All intangible assets have an indefinite useful life.
b) All intangible assets are internally generated.
c) All intangible assets should be tested for impairment.
d) All intangible assets are subsequently measured using the cost model.
5.
On August 31, 20X8, Gamma Corp. decided to sell its retail division.
Upon review of the relevant facts, Gamma decided to account for this
division as a discontinued operation. After the asset group was listed
for sale, a broker was able to source an offshore buyer for the unit,
and on October 31, 20X8, Gamma received a binding offer. Gamma agreed to
pay a higher than expected sales commission due to the unique nature of
the offer. Gamma prepares monthly financial statements and reports its
financial results in accordance with IFRS.
August 31, 20X8
Carrying amount $15,000,000
Fair value 15,400,000
Estimated costs to sell 300,000
October 31, 20X8
Fair value (binding offer price) $15,500,000
Costs to sell (agreed-upon sales commission) 600,000
What amount of impairment loss (recovery), if any, should Gamma report on its October 31 financial statements?
a) $0
b) $100,000
c) $200,000
d) ($500,000)
