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

______________ is the process of allocating the cost of a plant asset to expense over its service life in a rational and systematic manner.

Land improvements are generally charged to the Land account.

The balance in the Accumulated Depreciation account represents the

Gagner Clinic purchases land for $175000 cash. The clinic assumes $1500 in property taxes due on the land. The title and attorney fees totaled $1000. The clinic has the land graded for $2200. What amount does Gagner Clinic record as the cost for the land?

If an acquired franchise or license has an indefinite life the cost of the asset is not amortized.

Goodwill can be recorded

During 2017 Stein Corporation reported net sales of $5000000 and net income of $2100000. Stein also reported beginning total assets of $1000000 and ending total assets of $1500000. Stein's asset turnover is

Enos Company has decided to change the estimate of the useful life of an asset that has been in service for 2 years. Which of the following statements describes the proper way to revise a useful life estimate?

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

Mott Company uses the units-of-activity method in computing depreciation. A new plant asset is purchased for $48000 that will produce an estimated 100000 units over its useful life. Estimated salvage value at the end of its useful life is $4000. What is the depreciation cost per unit?

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

The depreciable cost of a plant asset is its original cost minus obsolescence.

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

Research and development costs

Research and development costs which result in a successful product which is patentable are charged to the Patent account.

Engler Company purchases a new delivery truck for $55000. The sales taxes are $4000. The logo of the company is painted on the side of the truck for $1600. The truck license is $160. The truck undergoes safety testing for $290. What does Engler record as the cost of the new truck?

Weller Company purchased a truck for $66000. The company expected the truck to last four years or 100000 miles with an estimated residual value of $6000 at the end of that time. During the second year the truck was driven 27000 miles. Compute the depreciation for the second year under each of the methods below and place your answers in the blanks provided. Units-of-activity $ Double-declining-balance $

Equipment with a cost of $400000 has an estimated salvage value of $25000 and an estimated life of 4 years or 15000 hours. It is to be depreciated using the units-of-activity method. What is the amount of depreciation for the first full year during which the equipment was used 3300 hours?

A change in the estimated useful life of a plant asset may cause a change in the amount of depreciation recognized in the current and future periods but not to prior periods.