Hello, I need these questions answered and the reasoning behind the answers, thanks.

1. In the year ended May 31, 20X5, Hardware Inc. purchased new machinery from an overseas manufacturer. The cost of the machine totalled $500,000 plus HST of 12%. Shipping and duties incurred by the company totalled $35,000. Hardware Inc. needed to bring a mechanic from overseas to assist with the installation. Costs of installation totalled $15,000. A rebate of $40,000 was given to Hardware since this was the company’s second machine purchase from the manufacturer. Prior to delivery, to prepare for installation of the new machine, Hardware incurred labour costs of $12,000 and general overhead of $9,000.

What is the total asset cost that Hardware should record for the new machinery?

a) $510,000

b) $522,000

c) $531,000

d) $582,000

2. Which of the following statements regarding the exchange of non-monetary assets is true?

a) Determining commercial substance for a transaction is based on professional judgment.

b) All non-monetary exchanges of assets are considered incidental to the company’s ordinary business activities.

c) The transaction must have commercial substance in order for the exchange to occur.

d) All transactions will result in a gain or loss being realized.

3. Evolution Corporation follows the proportional method for revaluation of its property, plant and equipment. On December 31, 20X3, the company had land with an original cost of $200,000. One loss has been previously recorded by Evolution on the land. Market appraisals obtained by management on December 31, 20X3, show that the fair market value of the land is now $260,000.

How should Evolution record the revaluation of the land on December 31, 20X3?

a) Credit gain on revaluation of land (P&L) for $80,000

b) Credit gain on revaluation of land (P&L) for $60,000

c) Debit other comprehensive income (OCI) — revaluation surplus for $80,000

d) Credit other comprehensive income (OCI) — revaluation surplus for $60,000

4. Which of the following statements regarding the accounting treatment of intangible assets is true?

a) All intangible assets have an indefinite useful life.

b) All intangible assets are internally generated.

c) All intangible assets should be tested for impairment.

d) All intangible assets are subsequently measured using the cost model.

5. On August 31, 20X8, Gamma Corp. decided to sell its retail division. Upon review of the relevant facts, Gamma decided to account for this division as a discontinued operation. After the asset group was listed for sale, a broker was able to source an offshore buyer for the unit, and on October 31, 20X8, Gamma received a binding offer. Gamma agreed to pay a higher than expected sales commission due to the unique nature of the offer. Gamma prepares monthly financial statements and reports its financial results in accordance with IFRS.

August 31, 20X8

Carrying amount $15,000,000

Fair value 15,400,000

Estimated costs to sell 300,000

October 31, 20X8

Fair value (binding offer price) $15,500,000

Costs to sell (agreed-upon sales commission) 600,000

What amount of impairment loss (recovery), if any, should Gamma report on its October 31 financial statements?

a) $0

b) $100,000

c) $200,000

d) ($500,000)

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