Exam 10: Plant Assets, Natural Resources, and Intangible Assets

Yocum Company purchased equipment on January 1 at a list price of $120000 with credit terms 2/10 n/30. Payment was made within the discount period and Yocum was given a $2400 cash discount. Yocum paid $6000 sales tax on the equipment and paid installation charges of $1760. Prior to installation Yocum paid $4000 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment?

Dougan Company purchased equipment on January 1 2016 for $90000. It is estimated that the equipment will have a $5000 salvage value at the end of its 5-year useful life. It is also estimated that the equipment will produce 100000 units over its 5-year life. Instructions Answer the following independent questions. 1. Compute the amount of depreciation expense for the year ended December 31 2016 using the straight-line method of depreciation. 2. If 16000 units of product are produced in 2016 and 24000 units are produced in 2017 what is the book value of the equipment at December 31 2017? The company uses the units-of-activity depreciation method. 3. If the company uses the double-declining-balance method of depreciation what is the balance of the Accumulated Depreciation-Equipment account at December 31 2018?

A plant asset was purchased on January 1 for $60000 with an estimated salvage value of $12000 at the end of its useful life. The current year's Depreciation Expense is $6000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $30000. The remaining useful life of the plant asset is

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

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.

The cost of land does not include

Equipment was purchased for $150000. Freight charges amounted to $7000 and there was a cost of $20000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $30000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be

Three factors that affect the computation of periodic depreciation expense are (1) _______________ (2) _______________ and (3) _________________.

Farr Company purchased a new van for floral deliveries on January 1 2017. The van cost $56000 with an estimated life of 5 years and $14000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the depreciation expense for 2017?

A company purchased land for $90000 cash. Real estate brokers' commission was $5000 and $7000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle the cost of land would be recorded at

Given the following account balances at year end compute the total intangible assets on the balance sheet of Kepler Enterprises. Cash \ 1,500,000 Accounts Receivable 4,000,000 Trademarks 1,000,000 Goodwill 3,000,000 Research \& Development Costs 2,000,000

The asset turnover is computed by dividing

To determine a new depreciation amount after a change in estimate of a plant asset's useful life the asset's remaining depreciable cost is divided by its remaining useful life.

A plant asset cost $288000 and is estimated to have a $36000 salvage value at the end of its 8-year useful life. The annual depreciation expense recorded for the third year using the double-declining-balance method would be

Which depreciation method is most frequently used in businesses today?

In recording the acquisition cost of an entire business

The calculation of depreciation using the declining balance method

Ermler Company purchased a machine at a cost of $80000. The machine is expected to have a $5000 salvage value at the end of its 5-year useful life. Instructions Compute annual depreciation for the first and second years using the (a) straight-line method. (b) double-declining-balance method.

If a plant asset is sold before it is fully depreciated

For each entry below make a correcting entry if necessary. If the entry given is correct then state "No entry required." (a) The $60 cost of repairing a printer was charged to Equipment. (b) The $5000 cost of a major engine overhaul was debited to Maintenance and Repairs Expense. The overhaul is expected to increase the operating efficiency of the truck. (c) The $6000 closing costs associated with the acquisition of land were debited to Miscellaneous Expense. (d) A $500 charge for transportation expenses on new equipment purchased was debited to Freight-In.