Exam 1: Property, plant and Equipment Intangibles

When the cost of the asset changes because of a subsequent capital expenditure,revised depreciation for current and future periods must be calculated and adjusted.

Discuss accounting for intangible assets.

On January 2,2020,Mullins Company purchased a delivery truck for $45,000 cash.The truck had an estimated useful life of seven years and an estimated residual value of $3,000.Straight-line depreciation was used.Assuming the transactions have commercial substance,prepare the journal entries to record the disposition of the truck on September 1,2019,under each of the following assumptions: (a)The truck and $55,000 cash were exchanged for equipment that had a fair value of $70,000. (b)The truck and $40,000 cash were exchanged for a new delivery truck that had a fair value of $70,000.

The original cost of an asset minus accumulated depreciation is called

To be charged to and reported as part of the cost of property,plant and equipment,an expenditure must be normal,reasonable,and necessary in preparing the asset for its intended use.

SportsWorld purchased property for $100,000.The property included a building,parking lot,and land.The building was appraised at $65,000; the land at $40,000; and the parking lot at $10,000.To the nearest dollar,the value of the land to be recorded in the books should be

Accumulated depreciation represents funds set aside to buy new assets when the assets currently owned are replaced.

The units of production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

Robertson Company exchanged a used machine for a new machine.The old machine cost $80,000,and the new one had a cash price of $95,000.Robertson had recorded a total of $75,000 depreciation on the old machine and was allowed a $4,500 trade-in allowance.This transaction has commercial substance.What gain or loss should be recorded on the exchange?

Upside Down Company purchased new office equipment for $4,300,by trading in old equipment with a cost of $2,000 and accumulated depreciation to the date of trade of $1,900.Upside Down received a $50 trade-in allowance for the old equipment.This transaction has commercial substance.Prepare the journal entry to record the transaction.

Once the estimated depreciation for an asset is calculated

Discuss accounting for an impairment of property,plant and equipment.

Financial accounting and tax accounting require the same recordkeeping; therefore,there should be no difference in results between the two accounting systems.

Regardless of the method of depreciation,total depreciation expense will be the same over an asset's useful life.

Honey Crisp Co needed a new building,and found a suitable piece of land which had an old building on it.Honey Crisp made an agreement to buy the land and the building for $860,000 cash.The old building was demolished to make way for the new building.The following is information regarding the demolishing of the old building and construction of the new one: Cost of construction of new building, including \ 600,000 for a parking lot 5,260,000 Demolition of old building 150,000 Proceeds from salvage materials 20,000 Prepare a single journal entry to record the above cost (assume paid cash).

An asset can be disposed of by

The cost of developing,maintaining,or enhancing the value of a trademark is capitalized,or added to the value of the asset when incurred.

SportsWorld bought a new display case for $12,000 and was given a trade-in of $2,000 on an old display case.The old case had an original cost of $7,000 and accumulated depreciation of $4,000 to the date of trade-in.SportsWorld should record the new display case at:

Land purchased as a building site is a tangible asset called property,plant and equipment and is classified under the "Long-term Investments" section on the balance sheet.

Intangible assets