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

Salvage value is not subtracted from plant asset cost in determining depreciation expense under the declining-balance method of depreciation.

The declining-balance method of depreciation produces

Identify the item below where the terms are not related.

212. Santayana Company purchased a machine on January 1, 2013, for $60,000 with an estimated salvage value of $15,000 and an estimated useful life of 8 years. On January 1, 2015, Santayana decides the machine will last 12 years from the date of purchase. The salvage value is still estimated at $15,000. Using the straight-line method, the new annual depreciation will be

The calculation of depreciation using the declining balance method,

The IRS does not require the taxpayer to use the same depreciation method on the tax return that is used in preparing financial statements.

A coal company invests $15 million in a mine estimated to have 20 million tons of coal and no salvage value. It is expected that the mine will be in operation for 5 years. In the first year, 1,000,000 tons of coal are extracted and sold. What is the depletion expense for the first year?

A company purchased factory equipment for $700,000. It is estimated that the equipment will have a $70,000 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

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

A company sells a plant asset which originally cost $360,000 for $120,000 on December 31, 2015. 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

When an entire business is purchased, goodwill is the excess of cost over the book value of the net assets acquired.

The four subdivisions for plant assets are

Nicholson Company purchased equipment on January 1, 2013, for $80,000 with an estimated salvage value of $20,000 and estimated useful life of 8 years. On January 1, 2015, Nicholson decided the equipment will last 12 years from the date of purchase. The salvage value is still estimated at $20,000. Using the straight-line method the new annual depreciation will be:

In an exchange of plant assets that has commercial substance

On July 4, 2015, Wyoming Mining Company purchased the mineral rights to a granite deposit for $1,600,000. It is estimated that the recoverable granite will be 400,000 tons. During 2015, 100,000 tons of granite was extracted and 60,000 tons were sold. The amount of the Depletion Expense recognized for 2015 would be

A loss on disposal of a plant asset can only occur if the cash proceeds received from the asset sale are less than the asset's book value.

Depletion expense for a period is only recognized on natural resources that have been extracted and sold during the period.

A patent

Given the following account balances at year end, compute the total intangible assets on the balance sheet of Kepler Enterprises.

A change in the estimated salvage value of a plant asset requires a restatement of prior years' depreciation.