Exam 9: Property, Plant and Equipment Intangibles

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 Residual Value Depreciation Method Remaining Life Furniture \ 25,000 \ 20,000 \ 10,000 \ 500 Straight Line 3 years Computer \ 2,000 \ 1,000 \ 500 \- Double Declining 5 years Land \ 105,000 \- \9 0,000 N/A N/A Unlimited Machine \ 90,000 \ 25,000 \ 35,000 \ 5,000 Straight Line 3 years Record the entry for any impairment loss assuming that Matador & Company recorded no impairment losses in previous years. Record the entry for depreciation on each of the assets at March 31, 2020. Assume there was no change in residual or useful lives regardless of impairment losses.

GenX Music purchased a music distributor's collection of songs for $1,423,000. The copyrights are expected to last another 34 years. Prepare the journal entry to record the amortization expense for the first year. Amortization Expersse, Copyrights 41,853 Accumulated Amortization, 41,853 Copyrights

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 Denolition of old building 150,000 Proceeds from salvage materials 20,000 Prepare a single journal entry to record the above cost (assume paid cash).

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

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

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.

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.

Explain depreciation and the elements affecting its calculation.

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

The half year rule is the partial-year depreciation method that calculates depreciation by determining if the asset was used for more than half of the month.

A new machine is expected to produce 40,000 units of product during its 5-year life. The machine cost $38,000 and is estimated to have a $6,000 residual value. What is the first year's depreciation on the machine calculated by the straight-line method?

Discuss the accounting procedures involved for asset disposal through discarding, selling, or exchanging an asset.

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?

Property, plant and equipment include

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

A new machine is expected to produce 40,000 units of product during its 5-year life. The machine cost $180,000 and is estimated to have a $20,000 residual value. If depreciation on the machine is calculated by the double-declining-balance method, what is the depreciation for the first year?

Explain the difference between revenue and capital expenditures and how they are recorded in the accounting system.

Companies are required to use the straight-line depreciation method for tax purposes because this method yields the lowest depreciation expense and results in the highest payment of tax.

A new machine is expected to produce 60,000 units of product during its 5-year life. The machine cost $180,000 and is estimated to have a $20,000 residual value. If the machine produces 7,200 units of product during its first year, what is the depreciation for the year calculated by the units-of-production method (round rate to 2 decimals)?

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.