Exam 8: Operating Assets: Property, Plant, and Equipment, and Intangibles

Farley River Inc. Use the information presented below for Farley River, Inc.for 2015 and 2014 to answer the questions that follow.Farley River uses the straight-line depreciation method. -Refer to the information for Farley River, Inc. Between 2014 and 2015, Farley River sold some equipment that had an original cost of $57,500.Which statement is most likely true concerning transactions that must have occurred during the period?

The effect of recording depreciation for the year is an)

All intangible assets should be amortized.

Barnhill, Inc.uses straight-line depreciation for its equipment with an estimated useful life of 10 years and zero residual value.The CEO points out that the equipment will last much longer than 10 years, perhaps up to 20 years.What is the impact on earnings per share and net income of depreciating equipment over 20 years rather than 10 years?

Acquisition cost should not include expenditures unrelated to the acquisition, like repair costs for damages incurred during installation, or costs incurred after the asset was installed and use begun.

If Paulson Transport continues to use the ship in its eleventh year, what is the correct accounting procedure?

In 2010, Blanton Company bought equipment with a cost of $160,000, an estimated residual value of $40,000, and an estimated life of 15 years.It was depreciated by the straight-line method for 4 years.Due to obsolescence, it was determined at the beginning of 2014 that the useful life should be shortened by 3 years and the residual value changed to zero.The depreciation expense for 2014 is

Using the straight-line depreciation method will cause a company to incur tax expense in the early years of an asset's life than they would experience using an accelerated method of depreciation.

On December 1, 2014, Xeon Company bought land and an accompanying warehouse from Yen Company for $800,000.The fair market values of the land and the building at the time of purchase were $700,000 and $300,000, respectively.How much of the purchase price should Xeon Company allocate to the land and how much should be allocated to the building?

GAAP require that research and development costs to develop a new product be

A change in estimate of an asset's residual value involves restating the income statements of past periods for the estimate change.

Which of the following below is an example of a capital expenditure?

Many companies use MACRS Modified Accelerated Cost Recovery System) depreciation for

Norwood, Inc. Norwood, Inc.purchased a crane at a cost of $80,000.The crane has an estimated residual value of $5,000 and an estimated life of 8 years, or 12,500 hours of operation.The crane was purchased on January 1, 2015 and was used 2,700 hours in 2015 and 2,600 hours in 2016. -Refer to the information about Norwood, Inc. What amount will Norwood, Inc.report as depreciation expense over the 8-year life of the equipment?

Farley River Inc. Use the information presented below for Farley River, Inc.for 2015 and 2014 to answer the questions that follow.Farley River uses the straight-line depreciation method. -Refer to the information for Farley River, Inc. Using the 2015 data, what is the average life of Farley River's property, plant, and equipment rounded to one decimal place)?

Which statement is true concerning operating assets?

If a company constructs an asset over a period of time and borrows money, the amount of interest incurred during construction on the borrowed money is

Flexibility in valuation of property, plant, and equipment under IFRS may cause problems with comparability of one company with another.

Which of the following sets of factors is needed to calculate depreciation on plant and equipment?

Current accounting standards indicate that the costs of intangible assets with an indefinite life, such as goodwill, should