Chapter 6, Problem 18DQ

2. If a corporation purchases land and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on A) the intention of management for the property when the building was acquired.                                                                                                             B) the significance of the cost allocated to the building in relation to the combined cost of the land and building.                                                            C) the length of time for which the building was held prior to its demolition. D) the contemplated future use of the parking lot.

All of the following statements are true, except:     When property is acquired in exchange for another, its cost is usually determined by reference to the fair value of the asset surrendered       When a group of assets is acquired for a lump sum price, the lump sum price should be allocated to the individual assets based on their carrying values.       Donation of PPE should be recorded at the fair value of the donated asset       Property acquired in exchange for shares or other securities of the enterprise should be recorded at its fair value or the fair value of the securities, whichever is more clearly evident

If the entity uses the fair value model for investment property, which statement is true?   a. The entity should value the property at cost less accumulated depreciation and impairment. b. The entity does not record depreciation on the investment property. c. The entity depreciates the equipment using normal depreciation method d. The entity should report the increase in fair value in other comprehensive income for the period.