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

With the exception of land plant assets experience a ______________ in service potential over their useful lives.

Fleming Company purchased a machine on January 1 2017. In addition to the purchase price paid the following additional costs were incurred: (a) sales tax paid on the purchase price (b) transportation and insurance costs while the machinery was in transit from the seller (c) personnel training costs for initial operation of the machinery (d) annual city operating license (e) major overhaul to extend the life of the machinery (f) lubrication of the machinery gearing before the machinery was placed into service (g) lubrication of the machinery gearing after the machinery was placed into service and (h) installation costs necessary to secure the machinery to the building flooring. Instructions Indicate whether the items (a) through (h) are capital or revenue expenditures in the spaces provided: C = Capital R = Revenue.

The cost of paving fencing and lighting a new company parking lot is charged to a ______________ account.

The book value of a plant asset is always equal to its fair market value.

Which of the following is not true of ordinary repairs?

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

When constructing a building a company is permitted to include the acquisition cost and certain interest costs incurred in financing the project.

The amortization period for a patent cannot exceed

Once cost is established for a plant asset it becomes the basis of accounting for the asset unless the asset appreciates in value in which case market value becomes the basis for accountability.

The cost of successfully defending a patent in an infringement suit should be

A company purchased factory equipment on June 1 2017 for $160000. It is estimated that the equipment will have a $10000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation the amount to be recorded as depreciation expense at December 31 2017 is

The book value of an asset is equal to the

Depreciation is a process of

Eckman Company purchased equipment for $120000 on January 1 2016 and will use the double-declining-balance method of depreciation. It is estimated that the equipment will have a 5-year life and a $6000 salvage value at the end of its useful life. The amount of depreciation expense recognized in the year 2018 will be

Kingston Company purchased a piece of equipment on January 1 2016. The equipment cost $200000 and had an estimated life of 8 years and a salvage value of $25000. What was the depreciation expense for the asset for 2017 under the double-declining-balance method?

Recognition of depreciation permits the accumulation of cash for the replacement of the asset.

On July 1 2017 Melton Inc. invested $560000 in a mine estimated to have 800000 tons of ore of uniform grade. During the last 6 months of 2017 100000 tons of or were mined and sold. Instructions (a) Prepare the journal entry to record depletion. (b) Assume that the 100000 tons of ore were mined but only 85000 units were sold. How are the costs applicable to the 15000 unsold units reported?

Powell's Courier Service recorded a loss of $9000 when it sold a van that originally cost $84000 for $15000. Accumulated depreciation on the van must have been

Natural resources have two distinguishing characteristics (1) they are physically _______________ in operations and (2) they are _________________ only by an act of nature.

The declining-balance method of computing depreciation expense involves multiplying a _______________ book value by a _______________ percentage.