True or False?
1. With respect to audit opinions, if an outside auditor issues a qualified opinion this means that the auditor believes the financial statements are in accordance with GAAP. They are consistent, and all material information has been disclosed.
2. Assume the following:
- Company A purchases equipment from Company B
- Company B ships the equipment to Company A FOB Destination
- Company B pays for insurance during shipment of the equipment
Company A should include the cost of the insurance in the equipment cost that it records on its books.
3. Goodwill is recorded only when a business entity is acquired by a purchase.
4. Assume the following data relates to a basket purchase of assets made by Company A:
- Land with an appraised value of $85,000 is purchased.
- Buildings with an appraised value of $75,000 is purchased.
- Furniture with an appraised value of $200,000 is purchased.
The total purchase price for the basket of assets was $400,000.
Company A should record the land at a cost of $94,444.44.