Day 19

Question 1

In non-monetary transactions that have commercial substance, how are gains and losses calculated?

Answer 1

Difference between FMV and the Book Value of the asset given up

MCQ-05669

Question 2

If a non-monetary exchange occurs and it lacks commercial substance, what gain or loss is recognized?

Answer 2

No gain is recognized if boot was given and not received

MCQ-05669

Question 3

In the exchange of non-monetary assets that lacks commercial substance:

Answer 3

If boot is paid, all realized losses are fully recognized

If boot is received, realized gains are partially recognized

MCQ-05088

Question 4

Under which circumstance should the exchange be measured based on the reported amount of the non-monetary asset surrendered?

Answer 4

When the transaction lacks commercial substance

The reported amount of the non-monetary asset surrendered is used to record the belt acquired asset. If the transaction had commercial substance the fair value approach is used

MCQ-08514

Question 5

In order to have commercial substance, either
(1) the risk, timing, and amount of the
expected future cash flows from the asset
transferred differs significantly from the risk,
timing, and amount of the expected future
cash flows from the asset received, or (2) the
entity-specific value (based on the company’s
expectations of value of the asset and not that
of the marketplace) of the asset received
differs significantly (in relation to the fair
values of the assets exchanged) from the
asset transferred

Answer 5

MCQ-00717

Question 6

When a non-monetary exchange lacks commercial substance, the general rule is that:

Answer 6

No gain or loss is recognized, and the Book Value approach is used

MCQ-00718

Question 7

In an asset exchange having commercial substance, the basis of the property acquired is equal to:

Answer 7

FMV of the property given up (book value +Gain or -Loss)
Plus: cash paid
Less: cash received

MCQ-04478

Question 8

In an exchange leaving commercial substance, gains are only recognized when:

Answer 8

Cash is received

If cash received is less than 25% of the total consideration received, than a gain is recognized in proportion to the cash received

MCQ-04479

Question 9

R&D costs should be ________ when incurred.

Answer 9

Expenses

Exception: (1) If materials, equipment, or facilities developed have alternative future uses or (2) R&D costs are undertaken on behalf of others under a contractual agreement

MCQ-04153

Question 10

Under U.S. GAAP, list R&D expenses:

Answer 10

1. R&D contacted out to a 3rd party
2. Preproduction prototypes and model costs
3. Costs for searching for new products
4. Costs for new process alternatives

MCQ-00553

Question 11

Under U.S. GAAP, how are Organizational costs treated?

Answer 11

Expensed immediately

MCQ-04672

Question 12

The cost of equipment used in R&D activities that will have alternative future uses should be ______:

Answer 12

Capitalized and depreciated over it’s estimated useful life

MCQ-08266