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

Which of the following assets does not decline in service potential over the course of its useful life?

A truck costing $110,000 was destroyed when its engine caught fire. At the date of the fire, the accumulated depreciation on the truck was $50,000. An insurance check for $125,000 was received based on the replacement cost of the truck. The entry to record the insurance proceeds and the disposition of the truck will include a

Natural resources include standing timber and underground deposits of oil, gas, and minerals.

The declining-balance method of depreciation is called an accelerated depreciation method because it depreciates an asset in a shorter period of time than the asset's useful life.

A truck that cost $72,000 and on which $60,000 of accumulated depreciation has been recorded was disposed of for $18,000 cash. The entry to record this event would include a

Useful life is expressed in terms of use expected from the asset under the

Interest may be included in the acquisition cost of a plant asset

The Modified Accelerated Cost Recovery System (MACRS) is a depreciation method which

Additions and improvements to a plant asset that increase the asset's operating efficiency, productive capacity, or expected useful life are generally expensed in the period incurred.

The book value of an asset will equal its fair market value at the date of sale if

A loss on disposal of a plant asset as a result of a sale or a retirement is calculated in the same way.

Recording depreciation each period is an application of the expense recognition principle.

A machine with a cost of $480,000 has an estimated salvage value of $30,000 and an estimated useful life of 5 years or 15,000 hours. It is to be depreciated using the units-of-activity method of depreciation. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

Angie's Blooms purchased a delivery van for $40,000. The company was given a $4,000 cash discount by the dealer, and paid $2,000 sales tax. Annual insurance on the van is $1,000. As a result of the purchase, by how much will Angie's Blooms increase its van account?

The paneling of the body of an open pickup truck would be classified as a(n)

Goodwill is not recognized in accounting unless it is acquired from purchasing another business enterprise.

Equipment was purchased for $150,000. Freight charges amounted to $7,000 and there was a cost of $20,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $30,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be

If a fully depreciated plant asset is still used by a company, the

Natural resources are long-lived productive assets that are extracted in operations and are replaceable only by an act of nature.

Farr Company purchased a new van for floral deliveries on January 1, 2015. The van cost $56,000 with an estimated life of 5 years and $14,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the balance of the Accumulated Depreciation account at the end of 2016?