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principal and interest in the amount of $1.3 million are due
every December 31. Cruises used all proceeds as a down
payment for construction of a new cruise ship that is to be
delivered two years after the start of construction. What
should Cruise report as interest expense related to the note in
its income statement for the second year?
Question 13
Puff Co. acquired 40% of Straw, Inc.'s voting common stock
on January 2, 2005, for $400,000. The carrying amount of
Straw's net assets at the purchase date totaled $900,000. Fair
values equaled carrying amounts for all items except
equipment, for which fair values exceeded carrying amounts
by $100,000. The equipment has a five year life. Goodwill, if
any, is expected to have a useful life of 10 years. During 2005,
Straw reported net income of $150,000. What amount of
income from this investment should Puff report in its 2005
income statement?
Question 14
The discount resulting from the determination of a note
payable's present value should be reported on the balance
sheet as a(an)
Question 15
Land was purchased to be used as the site for the construction
of a plant. A building on the property was sold and removed by
the buyer so that construction on the plant could begin. The
proceeds from the sale of the building should be