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

The balances of the major classes of plant assets and accumulated depreciation by major classes should be disclosed in the balance sheet or notes.

Quayle Mining Company purchased land containing an estimated 15 million tons of ore at a cost of $4200000. The land without the ore is estimated to be worth $600000. The company expects to operate the mine for 12 years. Buildings costing $600000 are erected on the site and are expected to last for 25 years. Equipment costing $300000 with an estimated life of 15 years is installed. The buildings and the equipment possess no salvage value after the mine is closed. During the first year of operations the mining company mined and sold 2 million tons of ore. Instructions (a) Compute the depletion charge per ton. (b) Compute the depletion for the first year. (c) Compute the appropriate first year's depreciation expense for the buildings. (d) Compute the appropriate first year's depreciation expense for the equipment. (e) Prepare journal entries to record depletion and depreciation expenses for the year.

The cost of a purchased building includes all of the following except

The Modified Accelerated Cost Recovery System (MACRS) is a depreciation method which

The entry to record depletion

Lynn Company owns equipment that cost $120000 when purchased on January 1 2014. It has been depreciated using the straight-line method based on estimated salvage value of $15000 and an estimated useful life of 5 years. Instructions Prepare Lynn Company's journal entries to record the sale of the equipment in these four independent situations. 11eb1392_1bd7_26af_8021_c7e35195b1cb

Which of the following methods of computing depreciation is production based?

The book value of a plant asset is the difference between the

Depletion is

On January 2 2017 Kerwin Company purchased a patent for $48000. The patent has an estimated useful life of 25 years and a 20-year legal life. What entry would the company make at December 31 2017 to record amortization expense on the patent?

If the proceeds from the sale of a plant asset exceed its book value a gain on disposal occurs.

A truck was purchased for $180000 and it was estimated to have a $36000 salvage value at the end of its useful life. Monthly depreciation expense of $3000 was recorded using the straight-line method. The annual depreciation rate is

Compute the asset turnover based on the following:

Capital expenditures are expenditures that increase the company's investment in productive facilities.

The cost of land includes all of the following except

276 Dolan Company exchanges equipment with Eaton Company and Pawnee Company exchanges equipment with Fiero Company. The following information pertains to the exchanges: Instructions Prepare the journal entries to record the exchanges on the books of Dolan Company and Pawnee Company. The transaction has commercial substance.

Moreno Company purchased equipment for $900000 on January 1 2016 and will use the double-declining-balance method of depreciation. It is estimated that the equipment will have a 3-year life and a $40000 salvage value at the end of its useful life. The amount of depreciation expense recognized in the year 2018 will be

Cost allocation of an intangible asset is referred to as

A purchased patent has a legal life of 20 years. It should be

Each of the following is used in computing revised annual depreciation for a change in estimate except