FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 9: Plant Assets, Natural Resources, and Intangible Assets

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 111

True/False

Review LaterAdd Note

Review Later

To determine a new depreciation amount after a change in estimate of a plant asset's useful life, the asset's remaining depreciable cost is divided by its remaining useful life.

A) True
B) False

Correct Answer

verified

Show Answer

Question 112

True/False

Review LaterAdd Note

Review Later

Depletion expense for a period is only recognized on natural resources that have been extracted and sold during the period.

A) True
B) False

Correct Answer

verified

Show Answer

Question 113

Essay

Review LaterAdd Note

On January 1, 2018, Petersen Enterprises purchased natural resources for $1,800,000. The company expects the resources to produce 12,000,000 units of product. (1) What is the depletion cost per unit? (2) If the company mined and sold 20,000 units in January, what is depletion expense for the month?

On a balance sheet, natural resources may be described more specifically as all of the following except

Salvage value is not subtracted from plant asset cost in determining depreciation expense under the declining-balance method of depreciation.

Equipment that cost $420,000 and on which $200,000 of accumulated depreciation has been recorded was disposed of for $180,000 cash. The entry to record this event would include a

Garrison Company was organized on January 1. During the first year of operations, the following expenditures and receipts were recorded in random order in the account, Land. Instructions Analyze the foregoing transactions using the following tabular arrangement. Insert the number of each transaction in the Item space and insert the amounts in the appropriate columns.

Presented below are two independent situations: (a) Yount Company exchanged an old machine (cost $150,000 less $90,000 accumulated depreciation) plus $10,000 cash for a new machine. The old machine had a fair value of $54,000. Prepare the entry to record the exchange of assets by Yount Company. (b) Lawson Company trades old equipment (cost $90,000 less $54,000 accumulated deprecia-tion) for new equipment. Lawson paid $36,000 cash in the trade. The old equipment that was traded had a fair value of $54,000. Prepare the entry to record the exchange of assets by Lawson Company. The transaction has commercial substance.

Alvarado Company purchased a new machine for $400,000. It is estimated that the machine will have a $40,000 salvage value at the end of its 5-year useful service life. The double-declining-balance method of depreciation will be used. Instructions Prepare a depreciation schedule which shows the annual depreciation expense on the machine for its 5-year life.

A company purchased factory equipment on April 1, 2018 for $160,000. It is estimated that the equipment will have a $20,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2018 is

A patent should

Indicate whether each of the following expenditures should be classified as land (L), land improvements (LI), buildings (B), equipment (E), or none of these (X). _____ 1. Parking lots _____ 2. Electricity used by a machine _____ 3. Excavation costs _____ 4. Interest on building construction loan _____ 5. Cost of trial runs for machinery _____ 6. Drainage costs _____ 7. Cost to install a machine _____ 8. Fences _____ 9. Unpaid (past) property taxes assumed _____10. Cost of tearing down a building when land and a building on it are purchased

A company purchased factory equipment for $700,000. It is estimated that the equipment will have a $70,000 salvage value at the end of its estimated 5-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be

A coal company invests $15 million in a mine estimated to have 20 million tons of coal and no salvage value. It is expected that the mine will be in operation for 5 years. In the first year, 1,000,000 tons of coal are extracted and sold. What is the depletion expense for the first year?

The declining-balance method of depreciation is called an accelerated depreciation method because it depreciates an asset in a shorter period of time than the asset's useful life.

In computing depletion, salvage value is

Paneling the body of an open pickup truck would be classified as a(n)

A plant asset must be fully depreciated before it can be removed from the books.

Research and development costs

Hunt Company purchased factory equipment with an invoice price of $90,000. Other costs incurred were freight costs, $1,100; installation wiring and foundation, $2,200; material and labor costs in testing equipment, $700; oil lubricants and supplies to be used with equipment, $500; fire insurance policy covering equipment, $1,400. The equipment is estimated to have a $5,000 salvage value at the end of its 8-year useful service life. Instructions (a) Compute the acquisition cost of the equipment. Clearly identify each element of cost. (b) If the double-declining-balance method of depreciation was used, the constant percentage applied to a declining book value would be __________.