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

When an asset is purchased during the year it is not necessary to record depreciation expense in the first year under the declining-balance depreciation method.

Mehring Company reported net sales of $540000 net income of $72000 beginning total assets of $240000 and ending total assets of $360000. What was the company's asset turnover?

The declining-balance method of computing depreciation is known as an _____________ depreciation method.

For each of the following unrelated transactions (a) determine the amount of the amortization expense or depletion for the current year and (b) present the adjusting entries required to record each expense at year end. (1) Timber rights were purchased on a tract of land for $480000. The timber is estimated at 1200000 board feet. During the current year 75000 board feet of timber were cut and sold. (2) Costs of $8000 were incurred on January 1 to obtain a patent. Shortly thereafter $22000 was spent in legal costs to successfully defend the patent against competitors. The patent has an estimated legal life of 12 years.

The Accumulated Depletion account is deducted from the cost of the natural resource in the balance sheet.

Sargent Corporation bought equipment on January 1 2017. The equipment cost $360000 and had an expected salvage value of $60000. The life of the equipment was estimated to be 6 years. The depreciation expense using the straight-line method of depreciation is

Which of the following is not an intangible asset arising from a government grant?

A term that is not synonymous with property plant and equipment is

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

If a company incurs legal costs in successfully defending its patent these costs are recorded by debiting

A truck costing $110000 was destroyed when its engine caught fire. At the date of the fire the accumulated depreciation on the truck was $50000. An insurance check for $125000 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

The book value of a plant asset is obtained by subtracting ______________ from the ______________ of the plant asset.

Angie's Blooms purchased a delivery van with a list price of $40000. The company was given a $4000 cash discount by the dealer and paid $2000 sales tax. Annual insurance on the van is $1000. As a result of the purchase by how much will Angie's Blooms increase its van account?

Farley Corporation purchased land adjacent to its plant to improve access for trucks making deliveries. Expenditures incurred in purchasing the land were as follows: purchase price $70000; broker's fees $6000; title search and other fees $5000; demolition of an old building on the property $5700; grading $1200; digging foundation for the road $3000; laying and paving driveway $25000; lighting $7500; signs $1500. List the items and amounts that should be included in the Land account.

Kahn Mining Company purchased a mine for $60 million which is estimated to have 250000 tons of ore and a salvage value of $10 million. (a) In the first year 50000 tons of ore are extracted and sold. Prepare the journal entry to record depletion for the first year. (b) In the second year 150000 tons of ore are extracted but only 125000 tons are sold. Prepare the journal entry to record depletion for the second year. (c) What amount and in what account are the tons of ore not sold reported?

All plant assets (fixed assets) must be depreciated for accounting purposes.

Identify the following expenditures as capital expenditures or revenue expenditures. (a) Replacement of worn out gears on factory machinery. (b) Construction of a new wing on an office building. (c) Painting the exterior of a building. (d) Oil change on a company truck. (e) Painting and lettering of a used truck upon acquisition of the truck. (f) Overhaul of a truck motor. One year extension in useful life is expected. (g) Purchased a wastebasket at a cost of $10.

Accumulated Depletion

On October 1 2017 Holt Company places a new asset into service. The cost of the asset is $120000 with an estimated 5-year life and $30000 salvage value at the end of its useful life. What is the depreciation expense for 2017 if Holt Company uses the straight-line method of depreciation?

Which of the following statements concerning financial statement presentation is not a true statement?