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

The cost of a patent must be amortized over a 20-year period.

The factor that is not relevant in computing depreciation is

When vacant land is acquired expenditures for clearing draining filling and grading should be charged to the ______________ account.

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

Frank White the new controller of Youngman Company has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2017. His findings are as follows. All assets are depreciated by the straight-line method. Youngman Company uses a calendar year in preparing annual financial statements. After discussion management has agreed to accept Frank's proposed changes. Instructions (a) Compute the revised annual depreciation on each asset in 2017. (Show computations.) (b) Prepare the entry (or entries) to record depreciation on the building in 2017.

Carey Company buys land for $50000 on 12/31/16. As of 3/31/17 the land has appreciated in value to $50700. On 12/31/17 the land has an appraised value of $51800. By what amount should the Land account be increased in 2017?

In an exchange of plant assets that has commercial substance

The cost of demolishing an old building on land that has been acquired so that a new building can be constructed should be charged to the ______________ account.

Match the items below by entering the appropriate code letter in the space provided.

Gorman Mining invested $960000 in a mine estimated to have 1200000 tons of ore with no salvage value. During the first year 200000 tons of ore were mined and sold. Instructions Prepare the journal entry to record depletion.

The allocation of the cost of an asset to expense over its useful life is called _________________ for tangible plant assets ________________ for natural resources and _________________ for intangible assets.

The fair value of a plant asset is always the same as its book value.

Match the items below by entering the appropriate code letter in the space provided.

In recording the purchase of a business goodwill should be recorded for the excess of ______________ over the _______________ of the net assets acquired.

If disposal of a plant asset occurs at any time during the year ___________________ for the fraction of the year to the date of disposal must be recorded.

Equipment that cost $420000 and on which $200000 of accumulated depreciation has been recorded was disposed of for $180000 cash. The entry to record this event would include a

Zimmer Company sold the following two machines in 2017: Cost \ 76,000 \ 80,000 Purchase date 7/1/13 1/1/14 Useful life 8 years 5 years Salvage value \ 4,000 \ 4,000 Depreciation method Straight-line Double-declining-balance Date sold 7/1/17 8/1/17 Sales price \ 35,000 \ 16,000 Instructions Journalize all entries required to update depreciation and record the sales of the two assets in 2017. The company has recorded depreciation on the machines through December 31 2016.

The asset turnover is calculated as total sales divided by ending total assets.

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

Wesley Hospital installs a new parking lot. The paving cost $40000 and the lights to illuminate the new parking area cost $25000. Which of the following statements is true with respect to these additions?