Name: 

Victor Company purchased a machine on December 31, 2007, for $100,000.    The machine is being depreciated on the straight-line basis with no salvage value and a five-year life.    Assume that there was a rise in current (replacement) cost of the machine of 10% during 2008, and of 10% during 2009 (based on the December 31, 2008, current cost).   In a supplementary current cost statement at December 31, 2009, Victor would report accumulated depreciation for the above machine of

On January 1, 2009, Richmond, Inc., signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,000,000.   It was estimated that it would take three years to complete the project.   Also on January 1, 2009, to finance the construction cost, Richmond borrowed $4,000,000 payable in 10 annual installments of $400,000, plus interest at the rate of 11%.   During 2009 Richmond made deposit and progress payments totaling $1,500,000 under the contract; the average amount of accumulated expenditures was $650,000 for the year.   The excess borrowed funds were invested in short-term securities, from which Richmond realized investment income of $250,000.   What amount should Richmond report as capitalized interest at December 31, 2009?

Essex Corporation bought a machine for $105,000 on January 3, 20X1.   The machine has an estimated useful life of ten years, with no salvage value.   The current cost of this machine at December 31, 20X1, was $135,000.   Using straight-line depreciation on an average current cost basis, how much depreciation should be charged to current cost income from continuing operations for 20X1?

In October 20X2 Ewing Company exchanged an old packaging machine, which cost $120,000 and was 50% depreciated, for a dissimilar used machine and paid a cash difference of $16,000.   The market value of the old packaging machine was determined to be $70,000.   The transaction had commercial substance for Ewing.   For the year ended December 31, 20X2, what amount of gain or loss should Ewing recognize on this exchange?

What fraction should be used to adjust sales for price-level changes?

What fraction should be used to adjust bond payable for price-level changes?

On December 30, 20X6, Case Company purchased a machine from Pitt in exchange for a noninterest bearing note requiring ten payments of $10,000.   The first payment was made on December 30, 20X6, and the others are due annually on December 30.   The prevailing rate of interest for this type of note at date of issuance was 10%.   Present value factors are as follows:

Period		Present value of odinary annuity of $1 @ 10%		Present value of annuity in advance of 1 @ 10%
9		5.759		6.335
10		6.145		6.759

Included in Witt Corp.'s liability account balances at December 31, 20X8, were the following:

*	14% note payable issued October 1, 20X8 maturing September 30, 20X9	$500,000
*	16% note payable issued April 1, 20X6 payable in six equal annual installments of $200,000 beginning April 1, 20X7	800,000

The following information pertains to each unit of merchandise purchased for resale by Vend Co.:

Glen, Inc., purchased certain plant assets under a deferred payment contract on December 31, 20X1.   The agreement was to pay $10,000 at the time of purchase and $10,000 at the end of the next five years.   The plant assets should be valued at

In an arm's-length transaction, Company A and Company B exchanged nonmonetary assets with no monetary consideration involved.   The exchange did culminate an earning process for both Company A and Company B, and the fair values of the nonmonetary assets were both clearly evident.   The accounting for the exchanges should be based on the

The replacement cost of an inventory item is below the net realizable value and above the net realizable value less the normal profit margin.   The original cost of the inventory item is above the replacement cost and below the net realizable value.   As a result, under the lower of cost or market method, the inventory item should be valued at the

The original cost of an inventory item is above the replacement cost and above the net realizable value.   The replacement cost is below the net realizable value less the normal profit margin.   Under the lower of cost or market method the inventory item should be priced at its

When an investor uses the cost method to account for investments in common stock, cash dividends received by the investor from the investee should normally be recorded as

An accountant who recommends the adjustment of financial statements for price-level changes should not support his recommendation by stating that

For purposes of adjusting financial statements for changes in the general level of prices, monetary items consist of

An investor uses the equity method to account for its 30% investment in common stock of an investee.   Amortization of the investor’s share of fair market value over book value of depreciable assets at the date of purchase should be reported in the investor’s income statement as part of

During a period of inflation, an account balance remains constant.   With respect to this account, a purchasing power loss will be recognized if the account is a