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

A plant asset cost $90000 when it was purchased on January 1 2010. It was depreciated by the straight-line method based on a 9-year life with no salvage value. On June 30 2017 the asset was discarded with no cash proceeds. What gain or loss should be recognized on the retirement?

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 depreciable cost of the equipment is

Don's Copy Shop bought equipment for $450000 on January 1 2016. Don estimated the useful life to be 3 years with no salvage value and the straight-line method of depreciation will be used. On January 1 2017 Don decides that the business will use the equipment for a total of 5 years. What is the revised depreciation expense for 2017?

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 book value of the plant asset on the December 31 2017 balance sheet assuming that Holt Company uses the double-declining-balance method of depreciation?

If a plant asset is retired before it is fully depreciated and no salvage value is received

Ordinary repairs should be recognized when incurred as revenue expenditures.

Depreciable cost is the

A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership.

Yanik Company's delivery truck which originally cost $84000 was destroyed by fire. At the time of the fire the balance of the Accumulated Depreciation account amounted to $57000. The company received $48000 reimbursement from its insurance company. The gain or loss as a result of the fire was

Losses on an exchange of plant assets that has commercial substance are

A company purchased factory equipment on April 1 2017 for $160000. It is estimated that the equipment will have a $20000 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

Copyrights are granted by the federal government

Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as

In computing depreciation salvage value is

Depletion expense is reported in the income statement as an operating expense.

If a mining company extracts 1500000 tons in a period but only sells 1200000 tons

As a recent graduate of State University you're aware that IFRS requires component depreciation for plant assets. A friend has asked you to succinctly explain what component depreciation means. Which of the following correctly describes component depreciation?

The Accumulated Depreciation account represents a cash fund available to replace plant assets.

A company exchanges its old office equipment and $80000 for new office equipment. The old office equipment has a book value of $56000 and a fair value of $40000 on the date of the exchange. The cost of the new office equipment would be recorded at

Jack's a popular pizza hang-out has a thriving delivery business. Jack's has a fleet of three delivery automobiles. Prior to making the entry for this year's depreciation expense the subsidiary ledger for the fleet is as follows: Accumulated Estimated Depr.-Beg. Miles Operated Car Cost Salvage Value Life inMiles of the Year During Year 1 \ 21,000 \ 3,000 75,000 \ 2,520 20,000 2 18,000 2,400 60,000 2,340 22,000 3 23,500 2,500 70,000 2,000 19,000 Instructions (a) Determine the depreciation rates per mile for each car. (b) Determine the depreciation expense for each car for the current year. (c) Make one compound journal entry to record the annual depreciation expense for the fleet.