Exam 8: Reporting and Analyzing Long-Lived Assets

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

When a change in estimate is made, there is no correction of previously recorded depreciation expense.

Companies only dispose of plant assets by either sale or exchange.

Nix Corporation sold equipment for $40,000. The equipment had an original cost of $120,000 and accumulated depreciation of $60,000. Ignoriing the tax effect, as a result of the sale

Brevard Corporation purchased a taxicab on January 1, 2016 for $34,000 to use for its shuttle business. The cab is expected to have a five-year useful life and no salvage value. During 2017, it retouched the cab's paint at a cost of $1,600, replaced the transmission for $4,000 (which extended its life by an additional 2 years), and tuned-up the engine for $200. If Brevard Corporation uses straight-line depreciation, what annual depreciation will Brevard report for 2017?

Intangible assets are the rights and privileges that result from ownership of long-lived assets that

A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.

Which of the following is not an intangible asset that is reported on the balance sheet?

The following information is provided for Nguyen Company and Northwest Corporation. (in \ millions) Nguven Company Northwest Corporation Net income 2017 \ 165 \ 420 Net sales 2017 1,650 4,900 Total assets 12/31/15 1,000 2,400 Total assets 12/31/16 1,050 3,000 Total assets 12/31/17 1,150 4,000 What is Nguyen's return on assets for 2017?

The calculation of depreciation using the declining-balance method

A company sells a plant asset that originally cost $360,000 for $120,000 on December 31, 2017. The accumulated depreciation account had a balance of $180,000 after the current year's depreciation of $30,000 had been recorded. The company should recognize a

A plant asset was purchased on January 1 for $75,000 with an estimated salvage value of $15,000 at the end of its useful life. The current year's depreciation expense is $5,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $35,000. The remaining useful life of the plant asset is

A patent

An asset was purchased for $140,000. It had an estimated salvage value of $35,000 and an estimated useful life of 10 years. After 5 years of use, the estimated salvage value is revised to $28,000 but the estimated useful life is unchanged. Assuming straight-line depreciation, depreciation expense in Year 6 would be

A plant asset with a cost of $300,000 and accumulated depreciation of $285,000 is sold for $35,000. What is the amount of the gain or loss on disposal of the plant asset?

A company purchased factory equipment for $450,000. It is estimated that the equipment will have a $45,000 salvage value at the end of its estimated 5-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be

Under an operating lease, both the leased asset and the liability are shown on the balance sheet.

Which of the following is not true of ordinary repairs?

Compton Inc. made a $500 ordinary repair to a piece of equipment. Compton's accountant debited this amount to the asset account, Equipment and credited Cash. Was this the correct entry and if not, why not?

Ryan, Inc. purchased a delivery truck with a $48,000 list price. The company was given a $4,800 cash discount by the dealer, and paid $2,400 sales tax. Annual insurance on the truck is $1,200. As a result of the purchase, by how much will Ryan, Inc. increase its truck account?