Exam 9: Property, Plant and Equipment Intangibles

A machine originally had an estimated service life of 5 years, and after 3 years, it was decided that the original estimate should have been for 10 years. The remaining cost to be depreciated should be allocated over the next

If the book value (or carrying amount) of a PPE item is greater than the amount to be recovered through the asset's use or sale, the asset is said to be

Equipment costing $14,000 with accumulated depreciation of $10,000 was sold for $3,000. The company should recognize a $1,000 loss on disposal of the equipment.

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

On September 30, 2019, Sarina Industries acquired and placed in service a machine that cost $950,000. It was estimated that the machine has a service life of five years and a residual value of $77,566. Using the double-declining-balance method of depreciation, prepare a schedule showing the depreciation amounts for the years 2019 through 2024 (use the nearest whole month method and round answers to the nearest dollar). Sarina closes its books on December 31 of every year. Rate = 2/5 $\times$ 100 = 40%

Intangible assets should be amortized over their anticipated legal, regulatory, contractual, competitive or economic life.

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.

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 $15,000, prepare the general journal entry to record the disposal.

Danner Co. purchased a computer on January 1, 2019, for $1,600,000. The straight-line method of depreciation was used, based on an expected life of 6 years and a residual value of $130,000. Prepare the journal entries to record depreciation for the first 6 months of 2021 and the sale of the computer on July 1, 2021, for $1,000,000. Jul-01 Depreciation Expense * 122,500 Accumulated Depreciation, Computer 122,500 1 Cash 1,000,000 Accumulated depreciation, Computer ** 612,500 Computer Equipment 1,600,000 Gain on Disposal of Equipment *** 12,500 *((\ 1,600,000-\ 130,000)/6)\times1/2 **(\ 1,600,000-\ 130,000)/6)\times2.5 years =\ 612,500

Residual value is

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.

RoboCop Company paid $31,400 for a machine that was expected to last 5 years and have a residual value of $5,000. During the fourth year of the machine's life, $5,400 was paid for repairs that were expected to increase the service life of the machine from 5 to 7 years. Prepare the general journal entry to record this transaction.

Natsuko Company traded an old forklift for a new forklift, receiving a $10,500 trade-in allowance and paying the remaining $37,200 in cash. The old forklift cost $39,000, and straight-line depreciation of $27,200 had been recorded to the date of trade under the assumption it would last 5 years and have a $5,000 residual value. At the date of trade, the fair value of the old forklift is $11,000, however the fair value of the new forklift is not known.(1) What was the book value of the old forklift?(2) At what amount should the new forklift be recorded?

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

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.

Xeno Co. incurred the following transactions concerning its machinery: Jan 1,2021 Purchased a machine for \ 60,000 cash, and also paid \ 3,000 cash to have it installed. Estimated useful life is 10 years and residual value is \ 3,000 . Straight line depreciation is used. Jan 1,2022 The machine' useful life was changed from 10 years to 9. Jan 8,2023 Paid \ 3,800 to replace a motor in the machine. This was considered a major overhaul.

Ordinary repairs

On January 1, 2023, PetraCo ordered a new machine to help increase production for one of its most popular products. The machine had an invoice price of $30,000 and PetraCo was required to pay shipping ($1,200) and insurance during shipping ($300) by boat from British Columbia to Toronto. The machine arrived on January 5, 2019 and was installed at a cost of $800 and calibrated and tested for a cost of $200. On February 1, 2019 it was put into operation. PetraCo's fiscal year runs from January to December. Round all final answers to the nearest dollar. -The machine was expected to last 10 years with a salvage value of $2,500. Prepare the journal entry to record depreciation for 2019 using the double-declining balance method of depreciation.

Goodwill is an intangible asset.

Inadequacy refers to