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Exam 10: Plant Assets, Natural Resources, and Intangible Assets

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Question 61

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Drago Company purchased equipment on January 1 2016 at a total invoice cost of $1200000. The equipment has an estimated salvage value of $30000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at December 31 2017 if the straight-line method of depreciation is used?

A) $240000
B) $480000
C) $234000
D) $468000

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Question 62

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Ordinary repairs which maintain operating efficiency and expected productive life are called _______________.

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Question 63

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If disposal of a plant asset occurs during the year depreciation is

Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally

Equipment costing $70000 with a salvage value of $14000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years. Assuming a revised estimated total life of 5 years and no change in the salvage value the depreciation expense for year 3 would be

Foley Word Processing Service uses the straight-line method of depreciation. The company's fiscal year end is December 31. The following transactions and events occurred during the first three years. 2016 $\quad$ July 1 $\quad$ Purchased a computer from the Computer Center for $\$ 1,900$ cash plus sales tax of $\$ 150$ , and shipping costs of $\$ 50$ . $\quad$$\quad$$\quad$ Nov. 3 $\quad$ Incurred ordinary repairs on computer of $\$ 140$ . $\quad$$\quad$$\quad$ Dec. 31 $\quad$ Recorded 2016 depreciation on the basis of a four year life and estimated salvage value of $\$ 500$ . 2017 $\quad$ Dec. 31 $\quad$ Recorded 2017 depreciation. 2018 $\quad$ Jan. 1 $\quad$$\quad$ Paid $\$ 300$ for an upgrade of the computer. This expenditure is expected to increase the operating efficiency ano capacity of the computer. Instructions Prepare the necessary entries. (Show computations.)

In the case of an exchange of plant assets resulting in a loss on disposal the cost of the new asset acquired is equal to the ______________ of the asset given up plus any cash paid by the purchaser.

On January 1 2014 Santo Company purchased a computer system for $30500. The system had an estimated useful life of 5 years and no salvage value. At January 1 2016 the company revised the remaining useful life to two years. What amount of depreciation will be recorded for 2016 and 2017?

Iverson Company purchased a delivery truck for $45000 on January 1 2016. The truck was assigned an estimated useful life of 5 years and has a residual value of $10000. Compute depreciation expense using the double-declining-balance method for the years 2016 and 2017.

An asset that cannot be sold individually in the market place is

A company purchases a remote site building for computer operations. The building will be suitable for operations after some expenditures. The wiring must be replaced to computer specifications. The roof is leaky and must be replaced. All rooms must be repainted and recarpeted and there will also be some plumbing work done. Which of the following statements is true?

Salem Company hired Kirk Construction to construct an office building for £6400000 on land costing £1600000 which Salem Company owned. The building was complete and ready to be used on January 1 2017 and it has a useful life of 40 years. The price of the building included land improvements costing £480000 and personal property costing £600000. The useful lives of the land improvements and the personal property are 10 years and 5 years respectively. Salem Company uses component depreciation and the company uses straight-line depreciation for other similar assets. What is the net amount reported for the building on Salem Company's December 31 2017 statement of financial position?

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. 11eb1392_1bd5_a0ed_8021_5b58552f27b4

Natural resources are

Bell Company and Kene Company exchanged trucks on January 1 2017. Bell's truck cost $140000 had accumulated depreciation of $115000 and has a fair value of $15000. Kene's truck cost $105000 had accumulated depreciation of $90000 and has a fair value of $15000. Instructions (a) Journalize the exchange for Bell Company. (b) Journalize the exchange for Kene Company.

The four subdivisions for plant assets are

A loss on disposal of a plant asset is reported in the financial statements

Natural resources are generally shown on the balance sheet under

A loss on the exchange of plant assets occurs when the fair market value of the old asset is less than its book value.

Additions and improvements