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

Barton Resort incurred the following costs to acquire and prepare land during 2015 for a new parking lot: purchase price for land, $800,000; cost to clear the land, $30,000; cost of paving, $40,000; and lighting for the parking lot, $20,000.How much should Barton record in the Land Improvements account?

The two items that must be estimated with respect to a plant asset in order to properly allocate cost to the affected accounting periods are ______________________________ and ______________________________.

Darrin Brown bought a pub.The purchase price was $695,000.An appraiser provided the following appraisal values: land $320,000: building $370,000 and equipment $60,000.What cost should be allocated to the building?

Wind Chime and Fire Hut Companies purchased identical equipment having an estimated useful life of ten years.Wind Chime uses the straight-line depreciation method and Fire Hut uses the double-declining-balance method of depreciation.Assuming the two entities are similar in all other respects, which of the following statements is correct?

Royal Company purchased a dump truck at the beginning of 2012 at a cost of $60,000.The truck had an estimated life of 6 years and an estimated residual value of $24,000.On January 1, 2014, the company made major repairs of $20,000 to the truck that extended the life 1 year.Thus, starting with 2014, the truck has a remaining life of 5 years and a new salvage value of $8,000.Royal uses the straight-line depreciation method.When calculating depreciation for 2014, Royal should