(TCO 1 and TCO 3) The acquisition costs of tangible operational assets do not include
The ordinary and necessary costs to bring the asset to its desired condition and location for
The net invoice price.
Delivery charges, installation, and any applicable sales tax.
Maintenance costs during the first
thirty days of use.
(TCO 1 and TCO 3) Research and development costs:
Are always expensed in the period incurred.
May be expensed or capitalized, at the option of the reporting entity.
Must be capitalized and amortized.
Generally pertain to activities that occur prior to the start of production.
(TCO 1 and TCO 3) Research and development costs for projects other than software
development should be:
Expensed in the period incurred.
Expensed in the period they are determined to be unsuccessful.
Deferred pending determination of success.
Expensed if unsuccessful or capitalized if successful.
(TCO 1, TCO 2,TCO 3) Holiday Laboratories purchased a high speed industrial centrifuge at a
cost of $420,000. Shipping costs totaled $15,000. Foundation work to house the centrifuge cost
$8,000. An additional water line had to be run to the equipment at a cost of $3,000. Labor and
testing costs totaled $6,000. Materials used up in testing cost $3,000. The capitalized cost is:
Cost $420,000 + shipping 15,000 + foundation work 8,000 + water line 3,000 + labor and
testing 6,000 =
(TCO 1, TCO 2,TCO 3) Alamos Co. exchanged land and $18,000 cash for equipment. The
book value and the fair value of the land were $82,000 and $90,000, respectively. Alamos would
record equipment at which of the following amounts?