1. Bloomington Inc. exchanged land for equipment and $3,800 in cash. The book value and the fair value of the land were $104,200 and $89,700, respectively.

Bloomington would record equipment and a gain/(loss) of:

2. During 2016, Prospect Oil Corporation incurred $4,900,000 in exploration costs for each of 20 oil wells drilled in 2016. Of the 20 wells drilled, 10 were dry holes. Prospect uses the successful efforts method of accounting. Assuming that Prospect depletes 25% of the oil discovered in 2016, what amount of these exploration costs would remain in its 12/31/16 balance sheet?
$51.95 million
$31.15 million
$49.00 million
$36.75 million

3. Cutter Enterprises purchased equipment for $75,000 on January 1, 2016. The equipment is expected to have a five-year life and a residual value of $4,500.

Using the double-declining balance method, depreciation for 2017 would be:
$30,000.
$16,920.
$18,000.
None of these answer choices are correct.

4. On March 31, 2016, M. Belotti purchased the right to remove gravel from an old rock quarry. The gravel is to be sold as roadbed for highway construction. The cost of the quarry rights was $316,000, with estimated salable rock of 40,000 tons. During 2016, Belotti loaded and sold 5,900 tons of rock and estimated that 34,100 tons remained at December 31, 2016. At January 1, 2017, Belotti estimated that 17,700 tons still remained. During 2017, Belotti loaded and sold 11,800 tons.

Belotti would record depletion in 2017 of:

$179,596.
$181,796.
$182,876.
$192,716.

5. Granite Enterprises acquired a patent from Southern Research Corporation on January 1, 2016 for $4.2 million. The patent will be used for 5 years, even though its legal life is 20 years. Rocky Corporation has made a commitment to purchase the patent from Granite for $210,000 at the end of five years. Compute Granite's patent amortization for 2016, assuming the straight-line method is used.
$420,000.
$798,000.
$840,000.
$399,000.

6. In January of 2016, Vega Corporation purchased a patent at a cost of $211,000. Legal and filing fees of $59,000 were paid to acquire the patent. The company estimated a 10-year useful life for the patent and uses the straight-line amortization method for all intangible assets. In January 2019, Vega spent $24,000 in legal fees for an unsuccessful defense of the patent and the patent is no longer usable. The amount charged to income (expense and loss) in 2019 related to the patent should be:
$ 24,000.
$213,000.
$ 51,000.
$211,000.

7. Fellingham Corporation purchased equipment on January 1, 2014, for $232,000. The company estimated the equipment would have a useful life of 10 years with a $20,800 residual value. Fellingham uses the straight-line depreciation method. Early in 2016, Fellingham reassessed the equipment's condition and determined that its total useful life would be only six years in total and that it would have no salvage value. How much would Fellingham report as depreciation on this equipment for 2016?
$31,627.
$42,240.
$44,440.
$47,440.

8. Broadway Ltd. purchased equipment on January 1, 2014, for $820,000, estimating a 5-year useful life and no residual value. In 2014 and 2015, Broadway depreciated the asset using the straight-line method. In 2016, Broadway changed to sum-of-years'-digits depreciation for this equipment. What depreciation would Broadway record for the year 2016 on this equipment? (Do not round your depreciation rate.)
$123,000.
$164,000.
$328,000.
$246,000.

9. Jung Inc. owns a patent for which it paid $82 million. At the end of 2016, it had accumulated amortization on the patent of $12 million. Due to adverse economic conditions, Jung's management determined that it should assess whether an impairment loss should be recognized for the patent. The estimated undiscounted future cash flows to be provided by the patent total $44 million, and the patent's fair value at that point is $31 million. Under these circumstances, Jung:
rev: 03_11_2014_QC_46414

Would record no impairment loss on the patent.
Would record a $51 million impairment loss on the patent.
Would record a $39 million impairment loss on the patent.
Would record a $13 million impairment loss on the patent.

10. In 2015, Antle Inc. had acquired Demski Co. and recorded goodwill of $345 million as a result. The net assets (including goodwill) from Antle's acquisition of Demski Co. had a 2016 year-end book value of $680 million. Antle assessed the fair value of Demski at this date to be $800 million, while the fair value of all of Demski's identifiable tangible and intangible assets (excluding goodwill) was $727 million. The amount of the impairment loss that Antle would record for goodwill at the end of 2016 is:

$73 million.
$272 million.
$0.
None of these answer choices are correct.

11. Robertson Inc. prepares its financial statements according to International Financial Reporting Standards. At the end of its 2016 fiscal year, the company chooses to revalue its equipment. The equipment cost $543,000, had accumulated depreciation of $243,000 at the end of the year after recording annual depreciation, and had a fair value of $333,000. After the revaluation, the accumulated depreciation account will have a balance of (Do not round intermediate calculations.):
$243,000.
$269,730.
$276,000.
None of these answer choices are correct.

12. Canliss Mining uses the retirement method to determine depreciation on its office equipment. During 2014, its first year of operations, office equipment was purchased at a cost of $12,000. Useful life of the equipment averages four years and no salvage value is anticipated. In 2016, equipment costing $4,700 was sold for $560 and replaced with new equipment costing $7,500. Canliss would record 2016 depreciation of:
$3,000.
$4,140.
$6,940.
None of these answer choices are correct.

13. Canliss Mining uses the replacement method to determine depreciation on its office equipment. During 2014, its first year of operations, office equipment was purchased at a cost of $18,000. Useful life of the equipment averages four years and no salvage value is anticipated. In 2016, equipment costing $4,800 was sold for $500 and replaced with new equipment costing $7,300. Canliss would record 2016 depreciation of:
$4,900.
$4,300.
$6,800.
None of these answer choices are correct.

14. General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for the assets at the plant:

The fair value of the Arizona plant is estimated to be $13,000,000.

Required:

1. Determine the amount of impairment loss.

2. If a loss is indicated, where would it appear in General Optic's multiple-step income statement?

Non-operating expenses

Operating expenses

3. If a loss is indicated, prepare the entry to record the loss.

4. Determine the amount of impairment loss assuming that the estimated undiscounted sum of future cash flows is $14,000,000 instead of $15,800,000.

5. Determine the amount of impairment loss assuming that the estimated undiscounted sum of future cash flows is $22,000,000 instead of $15,800,000.

15. In 2014, Alliant Corporation acquired Centerpoint Inc. for $370 million, of which $60 million was allocated to goodwill. At the end of 2016, management has provided the following information for a required goodwill impairment test:

Fair value of Centerpoint, Inc. $ 282 million
Fair value of Centerpoint's net assets (excluding goodwill) 250 million
Book value of Centerpoint's net assets (including goodwill) 310 million

Required:

1. Determine the amount of the impairment loss.

2. Determine the amount of the impairment loss assuming that the fair value of Centerpoint is $342 million.

16. On September 30, 2014, Leeds LTD. acquired a patent in conjunction with the purchase of another company. The patent, valued at $7.2 million, was estimated to have a 10-year life and no residual value. Leeds uses the straight-line method of amortization for intangible assets. At the beginning of January 2016, Leeds successfully defended its patent against infringement. Litigation costs totaled $520,000.

Required:

1. Calculate amortization of the patent for 2014 and 2015.
2. Prepare the journal entry to record the 2016 litigation costs.
3. Calculate amortization for 2016

17. Assume that Leeds prepares its financial statements according to IFRS.

a. Prepare the journal entry to record the 2016 litigation costs.
b. Calculate amortization for 2016.

18. Cadillac Construction Company uses the retirement method to determine depreciation on its small tools. During 2014, the first year of the company's operations, tools were purchased at a cost of $9,500. In 2016, tools originally costing $2,600 were sold for $400 and replaced with new tools costing $3,300.

Required:

1. Prepare journal entries to record each of the above transactions.

2. Prepare journal entries to record each of the above transactions, assuming that the company uses the replacement depreciation method instead of the retirement method.