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CPA exam question, inventory, asset exchanges

1. The Mateo Corporation's inventory at December 31, 2011, was $325,000 based on a physical count priced at cost, and before any necessary adjustment for the following:
- Merchandise costing $30,000, shipped F.o.b. shipping point from a vendor on December 30, 2011, was received on January 5, 2012.
- Merchandise costing $22,000, shipped F.o.b. destination from a vendor on December 28, 2011, was received on January 3, 2012.
- Merchandise costing $38,000 was shipped to a customer F.o.b. destination on December 28, arrived at the customer's location on January 6, 2012.
- Merchandise costing $12,000 was being held on consignment by Traynor Company.
What amount should Mateo Corporation report as inventory in its December 31, 2011, balance sheet?
A. $367,000.
B. $427,000.
C. $405,000.
D. $325,000.

2. Bloomington Inc. exchanged land for equipment and $3,000 in cash. The book value and the fair value of the land were $104,000 and $90,000, respectively.
Bloomington would record equipment at and record a gain/(loss) of:
Equipment Gain/(loss)
a. $87,000 $3,000
b. $104,000 $(5,000)
c. $87,000 $(14,000)
d. None of the above is correct

A. Option a
B. Option b
C. Option c
D. Option d

3.Alamos Co. exchanged equipment and $18,000 cash for similar equipment. The book value and the fair value of the old equipment were $82,000 and $90,000, respectively.
Assuming that the exchange has commercial substance, Alamos would record a gain/(loss) of:
B. $8,000.
C. $(8,000).
D. $0.

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Solution Summary

See tutorial and instructional notes in excel, attached.