Question

Question 17  

Balcom Corporation acquires a coal mine at a cost of $1,500,000. Intangible development costs total $360,000. After extraction has occurred, Balcom must restore the property (estimated fair value of the obligation is $180,000), after which it can be sold for $510,000. Balcom estimates that 5,000 tons of coal can be extracted. What is the amount of depletion per ton?

Question 17 options:

A.	$306
B.	$510
C.	$300
D.	$372

Question 18

Messersmith Company is constructing a building. Construction began in 2012 and the building was completed 12/31/12. Messersmith made payments to the construction company of $1,500,000 on 7/1, $3,150,000 on 9/1, and $3,000,000 on 12/31. Average accumulated expenditures were __________________.

Question 18 options:

	A.   $1,537,500
	B.    $1,800,000
	C.    $4,650,000
	D.   $7,650,000

Question 19

In 2012, MegaStores reported net income of $5.7 billion, net sales of $164.7 billion, and average total assets of $61.0 billion. What is MegaStores' return on total assets?

Question 19 options:

	A.   9.3%
	B.    10.7%
	C.    37.0%
	D.   270%

Question 20

Hardin Company received $60,000 in cash and a used computer with a fair value of $180,000 from Page Corporation for Hardin Company's existing computer having a fair value of $240,000 and an undepreciated cost of $225,000 recorded on its books. The transaction has no commercial substance. How much gain should Hardin recognize on this exchange, and at what amount should the acquired computer be recorded, respectively?

Question 20 options:

A.	$0 and $165,000
B.	$1,153 and $166,153
C.	$15,000 and $180,000
D.	$60,000 and $225,000

Answer 1

Answer of Part 17: The correct answer is A. i.e. $306

Amount of Depletion per ton = ($1,500,000 + $360,000 + $180,000 - $510,000) /5,000
Amount of Depletion per ton = $1,530,000 /5,000
Amount of Depletion per ton = $306

Answer of Part 18: The correct answer is B. i.e. $1,800,000

Average Accumulated Expenditures = ($1,500,000 *6/12) + ($3,150,000 *4/12)
Average Accumulated Expenditure = $750,000 + $1,050,000
Average Accumulated Expenditure = $1,800,000

Answer of Part 19: The correct answer is A. i.e. 9.3%

Return on Total Assets = Net Income / Average Total Assets *100
Return on Total Assets = $5.7 billion / $61.0billion *100
Return on Total Assets = 9.3%

Answer of Part 20: The correct answer is C. i.e. $15,000 and $180,000

Gain on exchange = Fair Value – Undepreciated cost
Gain on Exchange = $240,000 - $225,000
Gain on Exchange = $15,000

The computer should acquired at a cost of $180,000