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Exam 10: Plant Assets, natural Resources, and Intangibles

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Question 71

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On June 30,2017,Adilide,Inc.discarded equipment costing $40,000.Accumulated Depreciation as of December 31,2016,was $25,000.Assume annual depreciation on the equipment is $2,500.Prepare the journal entries for the 2017 depreciation expense and for the disposal of the equipment.

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*Loss on disposal = $40,0...

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Question 72

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A business that has a vacant building that is not currently being used would classify the building as a plant asset.

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Question 73

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Exchanges of plant assets that have commercial substance require any gain or loss on the transaction to be recognized.

The process of allocating the cost of a plant asset over its useful life is known as cost reduction.

Which of the following represents a privilege granted by a government to use public property in performing services?

Corel Sales sold its old office furniture for $6,000.The original cost was $12,000,and at the time of sale,accumulated depreciation was $8,000.What is the effect of this transaction?

A company's accountant capitalized a payment that should have been recorded as a revenue expenditure.How will this error affect the company's financial statements?

A truck was acquired for $100,000 and has accumulated depreciation of $70,000.The business exchanges the truck for a new one.The new truck has a market value of $120,000 and the business pays $100,000 cash.Assume the exchange has commercial substance.Prepare the journal entry to record this transaction.

Redribbon Gallery reported the following assets on its December 31,2017 balance sheet: If the net sales for the year amounted to $850,000,what is the asset turnover ratio for 2017?

An oil well cost $1,862,500 and is calculated to hold 250,000 barrels of oil.There is no residual value.Which journal entry is needed to record the expense for the extraction of 36,000 barrels of oil during the year? All 36,000 barrels were sold ding the year.(Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

Impairment of an intangible asset occurs when the book value of an asset is less than the fair value.

The lump-sum amount paid for a group of assets is divided among the acquired assets based on their relative market values.This method is known as the relative-market-value method.

On October 1,2017,Mulcahy,Inc.purchased a patent for $100,000 cash.Although the patent gives legal protection for 20 years,it is expected to be used for only eight years.Journalize the amortization expense for 2017.Assume straight-line amortization.

On January 1,2015,Alda Solutions paid $200,000 to acquire Fancy Phones,Inc. ,an electronic gadget-advertising website.At the time of the acquisition,Fancy Phone's balance sheet reported total assets of $200,000 and liabilities of $100,000.The fair market value of Fancy Phone's assets was $200,000.The fair market value of its liabilities was $100,000.At the end of 2018,goodwill was measured,and its fair value was determined to be $60,000.Record the impairment of goodwill.

Danube Corp.purchased a used machine for $21,000.The machine required installation costs of $6,000 and insurance while in transit of $700.At which of the following amounts would the machine be recorded?

An expenditure that increases the capacity or efficiency of a plant asset that extends the asset's life is known as a revenue expenditure.

Discarding plant assets involves disposing of the asset for no cash.

Estimated residual value is not depreciated because the company will receive this amount when the asset is sold.

Coney Island Corp.discards a truck that was originally purchased for $50,000 and had accumulated depreciation of $30,000.Prepare the journal entry for the disposal.

On January 1,2017,a corporation acquired a truck for $600,000.The residual value was estimated to be $20,000.The truck can be driven for 50,000 miles over the next three years.The actual usage of the truck was 8,640 miles for the first year.Calculate the rate of depreciation to be applied and depreciation for the first year using the units-of-production method.(Do not round your intermediate calculations. )