Exam 1: Property, plant and Equipment Intangibles

The purchase of real estate that includes land,building,and land improvements is called a lump-sum purchase.

Hertzog Company purchased and installed a machine on February 1,2019,at a total cost of $72,000.Straight-line depreciation was calculated based on the assumption of a five-year life and no residual value.The machine was disposed of on July 31,2022.Assuming the machine was sold for $22,000,prepare the general journal entry to record the disposal

On January 1 of this year,SportsWorld purchased a new cash register for $5,400.This register has a useful life of 10 years and a residual value of $400.Using the double-declining-balance method,how much depreciation expense should SportsWorld recognize for next year?

Creek Construction owned a bulldozer which was destroyed by fire.The bulldozer originally cost $38,000.The accumulated depreciation recorded to the date of loss was $20,000.The proceeds from the insurance company were $20,000.Creek Construction should recognize

On April 1,2020,Sagan Realty disposed of an automobile that had cost $50,000 on January 1,2018.The automobile had a residual value of $8,000,and a useful life of 5 years.The accounting records showed accumulated depreciation for this asset of $16,800 at December 31,2019.The asset was discarded after an accident,and $11,500 was received from an insurance claim.Prepare the journal entry to record the disposal of the automobile.

Headstrom Industries (HI)exchanged a three-year-old truck for a new truck that had a list price of $50,000,which was its fair value.The old truck originally cost $65,000 and has accumulated depreciation of $25,000 to the date of exchange.In addition to the $45,000 trade-in given for the old truck,HI paid $8,000 cash to complete the deal.

The Income Tax Act requires that companies use a declining-balance method for calculating the maximum capital cost allowance that may be claimed in any period

Gold Grain Construction (GGC)exchanged a three-year-old excavator for a new excavator that had a list price of $73,000,which was its fair value.The old excavator originally cost $85,000 and has accumulated depreciation of $45,000 to the date of exchange.In addition to the $45,000 trade-in given for the old excavator,GGC paid $8,000 cash to complete the deal.

Depreciation should always be recorded as soon as an asset is purchased.

The impairment of goodwill appears directly on the statement of changes in equity and not on the income statement.

On April 1,2020,Lockhart Company discarded equipment that cost $80,000,had a useful life of 5 years,a residual value of $14,000,and,under straight-line depreciation,accumulated depreciation as of December 31,2019 of $26,400. (a)Prepare the journal entry to record depreciation up to the date of disposal of the equipment. (b)Prepare the journal entry to record the disposal of the equipment.

SportsWorld spent $17,000 to remodel its store.This cost will be recognized with a debit to Store Building.

Intangible assets provide rights,privileges,and competitive advantages to the owner,are used in operations,and have no physical substance.

Ordinary repairs

Treating low-cost asset purchases as expenses is allowed by which principle?

Land improvements are

The most frequently used method of depreciation is the straight-line method.

The cost of an asset plus its accumulated depreciation equals the asset's book value.

The cost of land can include

Subsequent expenditures are purchases made after the acquisition of equipment to operate,maintain,repair,and improve it.