Exam 1: Property, plant and Equipment Intangibles

On the balance sheet,it is not necessary to report both the cost and the accumulated depreciation of an asset.

Machinery having a four-year useful life and a residual value of $5,000 was acquired for $65,000 cash on June 28.Using the nearest whole month method,the company would recognize $11,250 for depreciation expense at the end of the first year,December 31.

The gain or loss from disposal of property,plant and equipment is the difference between an asset's book value and the value received.

Game Company's computer was destroyed by fire.The computer originally cost $6,000,and accumulated depreciation to the date of the fire was $1,900.The company received $2,000 from an insurance policy that covered the computer and will use that money to help pay for a new computer.Prepare the general journal entry to record the loss of the computer and the receipt of cash from the insurance company.

An asset that cost $5,000 has a current book value of $2,000.A revision of the useful life of the asset estimates the asset has a remaining useful life of four years and will have a residual value of $400.Using the straight-line method,the revised depreciation will be $500 per year.

The $60,000 original cost of a machine is recorded in an account called Old Machine.After $45,000 of depreciation was recorded,the machine was traded in on a new machine with a cash price of $85,000.A $10,500 trade-in allowance was received on the old machine and the balance was paid in cash.This transaction has commercial substance.Prepare the general journal entry to record the trade; the cost of the new machine should be debited to a New Machine account.

Explain depreciation and the elements affecting its calculation.

On July 1,2020,Delta Company purchased and placed in service a machine with a cost of $460,000.Delta estimated the service life to be 6 years or 60,000 units of output,with an estimated residual value of $80,000.During 2020,15,000 units were produced.Prepare the necessary December 31,2020,adjusting journal entry to record depreciation for 2020 assuming Delta uses the double-declining-balance method to the nearest whole month.Round all calculations to 4 decimals.

A patent is an exclusive right granted to its owner to manufacture and sell a patented machine or device,or to use a process,for a specified period of time.

A patent

Because depreciation is based on predictions of residual value and useful life,depreciation is an estimate.

Goodwill is depreciated over its useful life as estimated by the business's management.

Revenue expenditures

On January 1,2019,Boone Company purchased a machine for $75,000 that had a 6-year life and a residual value of $6,000.After 3 years of use,on January 1,2022,Boone Company paid $7,500 to improve the efficiency of the machine.The effect of the expenditure was to increase the productivity of the machine without increasing its remaining useful life or changing its residual value.Boone uses straight-line depreciation. (1)What account should be debited in recording the $7,500 expenditure? (2)What amount of depreciation expense should be reported for 2022?

Factor(s)that might limit an intangible asset's useful life include

The straight-line method and the double-declining-balance method of depreciation

A depreciable asset that is purchased on March 18 would be depreciated for nine months of the first year,if the fiscal year ends on December 31 using nearest whole month method.

Depreciation amounts can be revised because of changes in the estimates for residual value,useful life or because of subsequent revenue expenditures.

Legal permissions for the extraction of oil and gas from the earth are known as

Inadequacy refers to the condition where the capacity of a property,plant and equipment item is too small to meet the company's productive demands.