33. A company reported $6 million of goodwill in last year's
statement of financial position. How should the company account for
the reported goodwill in the current year?
34. What factor must be present to use the units of production
(activity) method of depreciation?
35. Ajax Corp. has an effective tax rate of 30%. On January 1, 2000,
Ajax purchased equipment for $100,000. The equipment has a useful
life of 10 years. What amount of current tax benefit will Ajax realize
during 2000 by using the 150% declining-balance method of
depreciation for tax purposes instead of the straight-line method?
36. During 2005, Kent Co. incurred $204,000 of research and
development costs in its laboratory to develop a patent that was
granted on July 1, 2005. Legal fees and other costs associated with
registration of the patent totaled $41,000. The estimated economic life
of the patent is 10 years. What amount should Kent capitalize for the
patent on July 1, 2005?
37. Ichor Co. reported equipment with an original cost of $379,000
and $344,000 and accumulated depreciation of $153,000 and
$128,000, respectively, in its comparative financial statements for the
years ended December 31, 2005 and 2004.
During 2005, Ichor purchased equipment costing $50,000 and sold
equipment with a carrying value of $9,000.
38. On January 1, 2000, Nobb Corp. signed a 12-year lease for
warehouse space. Nobb has an option to renew the lease for an
additional 8-year period on or before January 1, 2004.
39. On April 1, 2004, Kew Co. purchased new machinery for
$300,000. The machinery has an estimated useful life of five years,
and depreciation is computed by the sum-of-the-years'-digits method.
The accumulated depreciation on this machinery at March 31, 2006
should be: