Exam 1: Property, plant and Equipment Intangibles

At the time a plant asset is being discarded or sold,it is necessary to update the accumulated depreciation of the plant asset to the date of disposal.

The useful life of a property,plant and equipment asset is

Vroom Company sold for $60,000 a machine that originally cost $100,000.The accumulated depreciation on this machine to date of sale was $47,000.What was Vroom Company's gain or loss on this sale?

Dersch Co.purchased a machine on January 1,2019,for $2,500,000.Using the table below,calculate the annual depreciation expense for each year of the machine's life (estimated at 5 years or 50,000 hours with a residual value of $150,000).During the machine's life,it was used 15,000; 14,000; 10,000; 9,000; and 6,000 hours. (a) (b) (c) Year Straight Line Units of Production Declining Balance 2019 \ 470,000 \ 705,000 \ 1,000,000 2020 470,000 658,000 600,000 2021 470,000 470,000 360,000 2022 470,000 423,000 216,000 2023 470,000 54,000 44,400 Totals \ 2,350,000 \ 2,310,000 \ 2,220,400

On April 1,Fog Company traded an old machine that originally cost $32,000 and had been depreciated $24,000 for a new machine that had a cash price of $40,000.Assuming that this transaction has commercial substance,(1)Prepare the journal entry to record the exchange under the assumption that a $5,000 trade-in allowance was received and the balance was paid in cash.(2)Prepare the journal entry to record the exchange under the assumption that instead of a $5,000 trade-in allowance,a $12,500 trade-in allowance was received and the balance was paid in cash.

Sports Med sold an X-ray machine that originally cost $100,000 for $60,000.The accumulated depreciation on the machine to the date of sale was $40,000.On this sale,Sports Med should recognize:

Voltarin Co purchased a machine for $625,000 on November 2,2019.The company expects the machine to last for 10 years or 50,000 hours of operation,with an estimated residual value of $15,000.During 2019 the computer was operated for 3,000 hours,while in 2020 it was operated for 2,600 hours.Calculate the depreciation expense for the computer for 2019 and 2020 using the following depreciation methods: (a)Straight-line (b)Double-declining-balance (c)Units-of-production

Matador & Company was preparing the annual financial statements and,as part of its year-end procedures,prepared the following schedule based on adjusted values at March 31,2020: Asset Cost Accumulated Depreciation Recoverable Amount Furniture \ 25,000 \ 20,000 \ 15,000 Computer \ 2,000 \ 1,000 \- Land \ 105,000 \- \ 125,000 Machine \ 9,000 \ 25,000 \ 45,000

An asset with a current book value of $5,000 has a current market value of $2,000.The company should recognize an impairment loss of $3,000.

Matador & Company was preparing the annual financial statements and,as part of its year-end procedures,prepared the following schedule based on adjusted values at March 31,2020:

The formula for calculating straight-line depreciation is

Timing Investments purchased land with a building for a total cost of $6,000,000 ($500,000 paid in cash and the balance on a long-term note).The appraised cost of the land and building were $3,500,000 and $1,900,000,respectively.Calculate the costs to be allocated to the land and the building and prepare the appropriate journal entry to record the acquisition.

How is the cost principle applied to property,plant and equipment?

SportsWorld purchased store equipment for $65,000.The equipment has an estimated residual value of $6,000,with an estimated useful life of 10 years.The annual depreciation using the straight-line method will be $3,900 per year.

Additional subsequent expenditures that result in future economic benefits and can be reliably measured should be treated as a(n)

Property,plant and equipment include

SportsWorld paid $140,000 for a property.The property included land appraised at $67,500,land improvements appraised at $25,000,and a building appraised at $55,500.What should be the allocation of costs in the accounting records (round calculations to 3 decimals)?

Discuss the four issues in accounting for property,plant and equipment.

The full disclosure principle allows us to record an asset costing $50 as a revenue expenditure

When assigning values to an exchange of assets you should always use the fair value of the asset received.