Business Finance Homework Help

I’m working on a accounting question and need a reference to help me learn.

Q1. What are the items considered in Capitalization of interests? Describe each item [1 marks]

Q2. Intangible assets have three main characteristics: (1) they are identifiable, (2) they lack physical existence, and (3) they are not monetary assets. 

Instructions

(a) Explain why intangibles are classified as assets if they have no physical existence. [0.5 mark]

(b) Explain why intangibles are not considered monetary assets. [0.25 mark]

(c) And, why does the accounting profession make a distinction between internally created intangible assets and purchased intangible assets?   [0.25 mark] 

Q3. On April 1, Paine Co. began construction of a small building. Payments of SAR 120,000 were made monthly for four months beginning on April 1. The building was completed and ready for occupancy on August 1. For the purpose of determining the amount of interest cost to be capitalized, calculate the weighted-average accumulated expenditures on the building by completing the schedule below: [1 mark]

Answer:

DateExpendituresCapitalization PeriodWeighted-Average Expenditures

Q4. Equipment that cost SAR80,000 and has accumulated depreciation of SAR43,000 is exchanged for equipment with a fair value of SAR32,000 and SAR8,000 cash is received. The exchange has commercial substance.

Instructions

(a)Show the calculation of the gain to be recognized from the exchange. [0.5 mark]

(b)Prepare the entry for the exchange. [0.5 mark]

Q5. Presented below are the components related to an office building that Lockard Company is considering purchasing for SAR10,000,000.

ComponentUseful LifeValue

Building structure60-year life5,400,000

Building engineering30-year life2,400,000

Building external works30-year life900,000

Instructions

Compute depreciation expense for 2010, assuming that Lockard uses component depreciation. [0.5 mark]

Assume that the building engineering was replaced in 20 years at a cost of SAR 2,600,000. Prepare the entry to record the replacement of the old component with the new component.  [0.5 mark]