Exam 10: Plant Assets, Natural Resources, and Intangibles

Identify the balance sheet classification of each of the following assets by placing an X in the correct classification: Plant Assets,Natural Resources,or Intangibles.

Fortune Drilling Company acquires a mineral deposit at a cost of $5,900,000.It incurs additional costs of $600,000 to access the deposit,which is estimated to contain 2,000,000 tons and is expected to take 5 years to extract.Compute the depletion expense for the first year assuming 418,000 tons were mined.

Prepare journal entries to record the following transactions of a company during the current year:

Intangible assets do not include:

A company's old machine that cost $40,000 and had accumulated depreciation of $22,000 was traded in on a new machine having an estimated 20-year life with an invoice price of $45,000.The company also paid $33,000 cash,along with its old machine to acquire the new machine.If this transaction has commercial substance,the new machine should be recorded at:

Depletion is:

An asset's book value is $18,000 on December 31,Year 5.The asset has been depreciated at an annual rate of $3,000 on the straight-line method.Assuming the asset is sold on December 31,Year 5 for $15,000,the company should record:

During the current year,Beldon Co.acquired a new computer with a cash price of $12,800 by exchanging an old one on which the company received a $1,500 trade-in allowance (with the balance of $11,300 paid in cash).The old computer cost $9,000 and its accumulated depreciation was $5,500 as of the exchange date.Assuming the exchange transaction had commercial substance,prepare the journal entry to record the exchange.

Ngu owns equipment that cost $93,500 with accumulated depreciation of $64,000.Ngu asks $35,000 for the equipment but sells the equipment for $33,000.Compute the amount of gain or loss on the sale.

Which of the following would be classified as a natural resource?

The depreciation method that uses a depreciation rate that is a multiple of the straight-line rate and applies it to an asset's beginning-of-period book value is ____________________.

On April 1,Year 1,Astor Corp.purchased and placed a plant asset in service.The following information is available regarding the plant asset: Make the necessary adjusting journal entries at December 31,Year 1,and December 31,Year 2 to record depreciation for each year under the straight-line depreciation method.

A company purchased land with a building for a lump-sum cost of $2,570,000 ($500,000 paid in cash and the balance on a long-term note).It was estimated that the land and building had market values of $600,000 and $2,400,000,respectively. Determine the cost to be apportioned to the land and to the building and prepare the journal entry to record the acquisition.

On January 1,a company purchased machinery for $75,000 that had a 6-year useful life and a salvage value of $6,000.After three years of straight-line depreciation,the company paid $8,500 cash at the beginning of the year to improve the efficiency of the machinery.The productivity of the machinery was improved without increasing its remaining useful life or changing its salvage value.Straight-line depreciation is used throughout the machinery's life. 1.Prepare the journal entry to record the $8,500 expenditure. 2.Prepare the journal entry to record depreciation expense for the fourth year.

Flask Company reports net sales of $4,315 million;cost of goods sold of $2,808 million;net income of $283 million;and average total assets of $2,136.Compute its total asset turnover.

An asset's book value is $36,000 on January 1,Year 6.The asset is being depreciated $500 per month using the straight-line method.Assuming the asset is sold on July 1,Year 7 for $25,000,the company should record:

Land improvements are:

Merchant Company purchased property for a building site.The costs associated with the property were: What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?

A company sold a machine that originally cost $90,000 for $28,000 cash.The accumulated depreciation on this machine was $47,000 at the time of the sale.What was the company's gain or loss on this sale?

Gaston owns equipment that cost $90,500 with accumulated depreciation of $61,000.Gaston asks $30,000 for the equipment but sells the equipment for $26,000.Which of the following would not be part of the journal entry to record the disposal of the equipment?