Exam 9: Plant Assets, Natural Resources, and Intangible Assets

An asset was purchased for $250,000. It had an estimated salvage value of $50,000 and an estimated useful life of 10 years. After 5 years of use, the estimated salvage value is revised to $40,000 but the estimated useful life is unchanged. Assuming straight-line depreciation, depreciation expense in year 6 would be

During 2015, Stein Corporation reported net sales of $5,000,000 and net income of $2,100,000. Stein also reported beginning total assets of $1,000,000 and ending total assets of $1,500,000. Stein's asset turnover is

Which of the following statements is not true when a fully depreciated plant asset is retired?

When an asset is purchased during the year, it is not necessary to record depreciation expense in the first year under the declining-balance depreciation method.

In an exchange of plant assets that has commercial substance

Losses on an exchange of plant assets that has commercial substance are

IFRS allows companies to revalue plant assets to fair value. When an asset has increased in value, where is the account "Revaluation Surplus" reported?

All plant assets (fixed assets) must be depreciated for accounting purposes.

A company purchased factory equipment on June 1, 2018, for $160,000. It is estimated that the equipment will have a $10,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2018, is

Yocum Company purchased equipment on January 1 at a list price of $120,000, with credit terms 2/10, n/30. Payment was made within the discount period and Yocum was given a $2,400 cash discount. Yocum paid $6,000 sales tax on the equipment, and paid installation charges of $1,760. Prior to installation, Yocum paid $4,000 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment?

When vacant land is acquired, expenditures for clearing, draining, filling, and grading should be charged to the ______________ account.

Land improvements are generally charged to the Land account.

A company decides to exchange its old machine and $231,000 cash for a new machine. The old machine has a book value of $189,000 and a fair value of $210,000 on the date of the exchange. The cost of the new machine would be recorded at

The cost of a patent should be amortized over its ____________ life or its ____________ life, whichever is shorter.

Ordinary repairs should be recognized when incurred as revenue expenditures.

Don's Copy Shop bought equipment for $450,000 on January 1, 2017. Don estimated the useful life to be 3 years with no salvage value, and the straight-line method of depreciation will be used. On January 1, 2018, Don decides that the business will use the equipment for a total of 5 years. What is the revised depreciation expense for 2018?

A factory machine was purchased for $375,000 on January 1, 2018. It was estimated that it would have a $75,000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. The company ran the machine for 4,000 actual hours in 2018. If the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2018 would be

______________ is the process of allocating the cost of a plant asset to expense over its service life in a rational and systematic manner.

Depreciable cost is the

If fully depreciated equipment that cost $10,000 with no salvage value is retired, the entry to record the retirement requires a debit to the ___________________________ account and a credit to the _____________________ account.