<p> A. Asset Recognition and Valuation</p><p>The transactions listed below relate to Apple Computer, a manufacturer of computer hardware and software. Indicate whether or not each transaction gives rise to an accounting asset of Apple Computer. If accounting recognizes an asset, give the account title, whether it’s a current or noncurrent asset, and the amount that will appear on the balance sheet.</p><p>1. The firm invests $8,000,000 in a government bond. The bond has a maturity value of $10,000,000 in three years.</p><p>2. The firm sends a check for $600,000 to a landlord for two months’ rent in advance on a warehouse.</p><p>3. The firm writes a check for $1,000,000 to obtain an option to purchase a building. The price of the building is $10,000,000.</p><p>4. The firm signs a four-year employment agreement with its president for $2,500,000 per year. The contract period begins next month.</p><p>5. The firm purchases a patent on a laser printer from its creator for $1,200,000.</p><p>6. The firm receives a patent on a new computer processor that it developed. Apple Computer spent $1,200,000 to develop the patented processor.</p><p>More Difficult Problems</p><p>1. Apple acquires land that a certified real estate appraiser had appraised at $5,000,000. Apple pays for the land by giving up shares in its corporation at a time when equivalent shares traded on the NASDAQ have a market value of $5,200,000.</p><p>2. Apple develops software for its Macintosh Computer. The total costs to Apple were $10,000,000. Of this amount, $8,000,000 went into the preliminary stages of development. The remaining $2,000,000 were for an established product that Apple thought they could sell.</p><p>For more details on asset recognition in the software industry, see SFAS 86. Asset Recognition & Valuation</p><p>1. Marketable securities 8000000 Cash 8000000 (Could be a long-term or short-term asset)</p><p>2. Prepaid rent 600000 Cash 600000</p><p>3. Building option 1000000 Cash 1000000 (Could be a long-term or short-term asset)</p><p>4. Nothing</p><p>5. Patent 1200000 Cash 1200000</p><p>5. Nothing</p><p>D1. Building 5000000 Common stock 5000000</p><p>D2. Capitalized software 2000000 Cash 2000000</p>