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

The cost of natural resources is not allocated to expense because the natural resources are replaceable only by an act of nature.

The Accumulated Depreciation account represents a cash fund available to replace plant assets.

Equipment was acquired on January 1, 2015, at a cost of $90,000. The equipment was originally estimated to have a salvage value of $5,000 and an estimated life of 10 years. Depreciation has been recorded through December 31, 2018, using the straight-line method. On January 1, 2019, the estimated salvage value was revised to $6,000 and the useful life was revised to a total of 8 years. Instructions Determine the depreciation expense for 2019.

On January 1, 2013, Santo Company purchased a computer system for $30,500. The system had an estimated useful life of 5 years and no salvage value. At January 1, 2018, the company revised the remaining useful life to two years. What amount of depreciation will be recorded for 2018 and 2019?

How is a gain or loss on the sale of a plant asset computed?

The amortization period for a patent cannot exceed

A plant asset was purchased on January 1 for $60,000 with an estimated salvage value of $12,000 at the end of its useful life. The current year's Depreciation Expense is $6,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $30,000. The remaining useful life of the plant asset is

A purchased patent has a legal life of 20 years. It should be

An asset that cannot be sold individually in the market place is

Depreciation is the process of allocating the cost of a plant asset over its service life in

Sargent Corporation bought equipment on January 1, 2018. The equipment cost $360,000 and had an expected salvage value of $60,000. The life of the equipment was estimated to be 6 years. The depreciation expense using the straight-line method of depreciation is

A change in the estimated useful life of a plant asset may cause a change in the amount of depreciation recognized in the current and future periods, but not to prior periods.

Brown Company purchased equipment in 2011 for $150,000 and estimated a $10,000 salvage value at the end of the equipment's 10-year useful life. At December 31, 2017, there was $98,000 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2018, the equipment was sold for $40,000. Prepare the appropriate journal entries to remove the equipment from the books of Brown Company on March 31, 2018. (b) Finney Company sold a machine for $15,000. The machine originally cost $35,000 in 2015 and $8,000 was spent on a major overhaul in 2018 (charged to the Equipment account). Accumulated Depreciation on the machine to the date of disposal was $28,000. Prepare the appropriate journal entry to record the disposition of the machine. (c) Stanley Company sold office equipment that had a book value of $12,000 for $16,000. The office equipment originally cost $40,000 and it is estimated that it would cost $50,000 to replace the office equipment. Prepare the appropriate journal entry to record the disposition of the office equipment.

Enos Company has decided to change the estimate of the useful life of an asset that has been in service for 2 years. Which of the following statements describes the proper way to revise a useful life estimate?

A company sells a plant asset which originally cost $360,000 for $120,000 on December 31, 2018. The Accumulated Depreciation account had a balance of $144,000 after the current year's depreciation of $36,000 had been recorded. The company should recognize a

Depletion expense is computed by multiplying the depletion cost per unit by the

All of the following intangible assets are amortized except

During 2018, Rathke Corporation reported net sales of $3,000,000, net income of $1,200,000, and depreciation expense of $100,000. Rathke also reported beginning total assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and accumulated depreciation of $500,000. Rathke's asset turnover is

A loss on disposal of a plant asset is reported in the financial statements

If the proceeds from the sale of a plant asset exceed its ______________, a gain on disposal will occur.