101) Intangibles with indefinite lives are never amortized.
102) Amortization for intangibles decreases both assets and liabilities.
103) Intangibles are considered long-lived assets even though they do not have a physical form.
104) All intangibles must be written down when their recognizable amount is less than their carrying amount.
105) An example of an intangible asset is a franchise.
106) Discuss the type of tangible long-lived assets Canadian Tire owns and controls, and how they are typically recorded on the balance sheet.
107) Rocky Mountain Water Corporation paid $270,000 to purchase equipment for use in its manufacturing operations. In addition, Rocky Mountain Water Corporation incurred the following expenditures relating to the equipment:
? $1,500 freight to have the equipment shipped to its manufacturing facility
? $750 insurance while the equipment was in transit
? $3,200 for special steel and concrete reinforcements used to house the equipment in the factory
? $1,200 for a one-year insurance policy on the equipment after it has been installed
? $300 to test the equipment before it is placed in service
? $400 for maintenance costs during the first year of service
Calculate the cost of the equipment.
108) Thompson Glacier Limited purchased a tract of land and contracted with a commercial developer to build an office building. Thompson Glacier Limited also engaged other contractors for fencing, paving, lighting, and landscaping.
Based on the following data, determine the cost of the land, the building, and the land improvements.
? Purchased land for $100,000.
? Paid $2,000 for seller's back property taxes.
? Paid a builder $225,000 to design and build the office building.
? Paid an excavation company $6,000 to grade and clear the land to make it suitable for building purposes.
? Paid a landscaping company $6,000 for trees and shrubs.
? Paid a lighting contractor $10,000 for outside lighting around the parking area and sidewalks.
? Paid $15,000 to have the parking lot paved.
? Paid a fence builder $12,000 to construct a security fence around the property.
109) Glenmore Reservoir Corporation paid $4,000,000 in a lump-sum purchase of land, a building, and equipment. The payment consisted of $1,500,000 cash and a note payable for the balance. An appraisal indicated the following fair values at the time of the purchase:
Land$ 1,600,000
Building2,500,000
Equipment500,000
Prepare the journal entry to record this lump-sum purchase (round all percentage calculations to two decimal places).
110) On October 15, 2010, Out West Enterprises purchased new factory equipment for its manufacturing facilities. The new equipment had an invoice price of $16,000, plus a 6% sales tax. In addition, the purchaser was responsible for $950 of freight charges. The sale was subject to 2/10, n/45 credit terms. Upon receipt of the new equipment Out West Enterprises paid $1,200 to have the equipment installed. To finance the purchase, Out West Enterprises borrowed $17,000 from the First Street Bank for 60 days at 12% interest. Out West Enterprises paid the invoice within 9 days.
Calculate the cost of the factory equipment to be capitalized on the books.