Question

Can someone please provide the solutions. No explanation needed, just the answers so I can double check my work.

     2.   Firms with tangible long-term assets and less predictable cash flows, such as auto manufacturers and steel companies, whose sales vary with changes in economic conditions, tend to use

a.	a more nearly equal mix of long-term debt and shareholders’ equity financing.
b.	a greater amount of long-term debt [80%] than shareholders’ equity financing [20%].
c.	a smaller amount of long-term debt [20%] than shareholders’ equity financing [80%].
d.	a greater amount of long-term debt [80%] than assets [20%].
e.	a greater amount of shareholders’ equity [80%] than assets [20%].

     3.   During Year 3, Carrington Company made the following expenditures relating to plant machinery and equipment:

·	Continuing, frequent, and low cost repairs	$46,000
·	Special long-term protection devices were attached to ten machines	11,000
·	A broken gear on a machine was replaced	5,000

How much should be charged to repairs and maintenance in Year 3?

a.	$46,000
b.	$51,000
c.	$57,000
d.	$41,000
e.	none of the above

     4.   Which of the following is/are not capitalized as an intangible asset?

a.	costs of an internally developed patent
b.	legal costs to defend a patent successfully
c.	goodwill acquired when a company purchases another company
d.	costs to purchase a patent
e.	none of the above

     5.   Repairs and maintenance do not include

a.	the costs of restoring an asset's service potential after breakdowns.
b.	expenditures that increase the asset's life.
c.	routine costs such as for cleaning and adjusting.
d.	major tune-ups including labor and parts.
e.	All of the above are not considered to be repairs or maintenance.

   12.   Sigma Company suffers a loss to its building in a fire and spends $100,000 on repairs and improvements. It judges that $80,000 of the expenditure replaces long-lived assets lost in the fire, and $20,000 represents improvements to the building. Which of the following is the single journal entry that Sigma Company will make?

a.	Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000    Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       100,000
b.	Loss from Fire   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000    Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         100,000
c.	Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000    Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        20,000    Loss from Fire   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         80,000
d.	Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 Loss from Fire   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    80,000    Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         100,000
e.	Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000    Loss from Fire   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       100,000

   16.   Firms treat expenditures as assets when they:

a.	have acquired rights to the future use of a resource as a result of a past transaction or event.
b.	can reliably measure the cost of the expected benefits at the time of initial recognition.
c.	can exercise the entity’s right to, or control of, the benefit.
d.	can obtain the future service potential and control others’ access to it.
e.	all of the above

Clarion Realty

Clarion Realty has decided to construct its own office building. The construction will be partially financed through a construction loan and any remainder will be financed from internally generated funds. The internal accountants have collected the following information concerning the construction.

	Average Balance	Construction	Other
Year	Construction Account	Debt @ 6%	Debt @ 10%
1	$2,000,000	$1,000,000	$500,000
2	$4,000,000	$1,000,000	$250,000
3	$3,000,000	$800,000	$200,000

   22.   The amount, if any, of capitalized interest cost for Year 1 is

a.	$0
b.	$50,000
c.	$60,000
d.	$110,000
e.	$170,000

   23.   The amount, if any, of capitalized interest cost for Year 2 is

a.	$0
b.	$50,000
c.	$60,000
d.	$180,000
e.	$230,000

   33.   When a firm constructs its own buildings or equipment:

a.	it recognizes the labor, material, and overhead costs incurred as an asset.
b.	U.S. GAAP and IFRS require firms to include, or capitalize, interest costs during construction in the cost of a self-constructed asset.
c.	it recognizes the labor, material, and overhead costs incurred as a period expense.
d.	U.S. GAAP and IFRS require firms to expense interest costs incurred during construction of a self-constructed asset.
e.	both choices a and b are correct.

Answer 1

Answer:-

2.   Firms with tangible long-term assets and less predictable cash flows, such as auto manufacturers and steel companies, whose sales vary with changes in economic conditions, tend to use

Answer is (a) a more nearly equal mix of long-term debt and shareholders’ equity financing.

3. Continuing, frequent, and low cost repairs $46,000

Add:- A broken gear on a machine was replaced $5,000

total aMount charged to repairs and maintenance in Year 3 is $51,000

Answer is (b) $51,000

4. goodwill acquired when a company purchases another company is not capitalized as an intangible asset.

So, Answer is (c) goodwill acquired when a company purchases another company

5. Repairs and maintenance do not include routine costs such as for cleaning and adjusting.

So Answer is (c) routine costs such as for cleaning and adjusting.