Navigating Asset Capitalization: Expenses vs Goodwill in Financial Accounting

Abstract

ACCT 6631: Advanced Financial Accounting Assignment #3 – MODULE 3 Due Date: 07/23/21 @11:59pm (Use your own words – do not copy word for word from the text or any other source) Write in paragraph form and sufficient to earn full points. You also earn full points by infusing your own words and thoughts – rather than that of another source. All answers must be typed in Word or Excel. No screenshots. PART I – Discussion & Theory Questions Question #1: What is the difference between capitalizing and expensing costs? Question #2: What is goodwill and how is it measured? Question #3: Explain how PPE and intangible assets acquired through donations are valued. Question #4: In your own words, give a real life example of a transaction “Lacking Commercial Substance” and “Having Commercial Substance”. Question #5: Other than using cash, list at least 3 ways that a company can acquire assets. _____________________________ _________________________________ ____________________________ Question #6: Dell computers has computers listed in their balance sheet under current assets. However, Dell Computers also has computers listed under PPE. Why does Dell have computers listed under different asset categories in the balance sheet? What is the difference between the computers listed under current assets vs the computers listed under PPE? Question #1: Milly Inc. purchased land, building, and equipment from Lyles Corporation for a cash payment of $375,300. The estimated fair values of the assets are land $58,400, building $265,800, and equipment $96,200. A) At what amounts should each of the three assets be recorded?( Round to 2 decimal places please) B) PREPARE THE JOURNAL ENTRIES to record the purchase of these assets assuming Milly paid cash. Question #2 Lawler Clothing sold manufacturing equipment for $26,000. Lawler originally purchased the equipment for $90,000, and depreciation through the date of sale totaled $76,000. Prepare the journal entry to record the sale of the manufacturing equipment. What was the gain or loss on the sale of the equipment? Question #3 Caterpillar Corp sold manufacturing equipment for $26,000. Caterpillar Corp originally purchased the equipment for $90,000, and depreciation through the date of sale totaled $76,000. Was there a gain or loss? Answer = __________________________________ What was the amount of the gain or loss on the sale of the equipment? Answer = ______________ Prepare the journal entry for the sale of the equipment. Question #4 On January 1, 2013, Byner Company purchased a used tractor. Byner paid $8,000 down and signed a noninterest-bearing note requiring $32,000 to be paid on December 31, 2015. The fair value of the tractor is not determinable. An interest rate of 12.75% properly reflects the time value of money for this type of loan agreement. The company's fiscal year-end is December 31. Required: Prepare the journal entry to record the acquisition of the tractor. Question #5 Turkey Lumber purchased a milling machine for $38,000. In addition to the purchase price, Turkey Lumber made the following...