Exam 16: Accounting for Property, Plant, Equipment, and Intangible Assets

Talarico's Subs purchased a new van for $26,000, its estimated useful life at 80,000 miles, residual value of $20,000. The van was driven 12,000 miles in year 1. What is the depreciation expense in year 1? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

Assume an asset costing $90,000 is expected to produce 400,000 units and have a salvage value of $2,000. During year 1, 75,000 units were produced; during year 2, 68,000 units were produced; and during year 3, 70,000 units were produced. Using units-of-production, compute the depreciation expense for each of the three years.

Define and compare capital expenditures and revenue expenditures.

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, in column 3 the financial statement that the account in which the account balance is reported, and in column 4 the account's nature (permanent/temporary). -

The units-of-production method does not take into account the passage of time.

When calculating declining balance depreciation, the straight-line rate was used instead of double the straight-line rate. In the first year of ownership, this error would cause:

Jim Kindel purchased equipment for $49,000 on January 1. Its residual value is $4,900 with a useful life of 10 years. The amount of depreciation expense in the first year under the double declining-balance method is:

The Cutcut Mower Service owned a truck with an original cost of $75,000 on which there is accumulated depreciation of $55,000. The truck is exchanged for a new truck priced at $90,000 with a trade-in allowance of $12,000 and the balance in cash. a. The book value of the old truck is ________. b. The loss on the exchange is ________. c. The cost basis in the new truck, assuming accounting rules is ________.

What would be the depreciation expense in year 1, using units-of-production, for a molding machine that cost $25,000, had a useful life of 8 years, and an estimated total machine hours of 30,000? The salvage value is $3,000 and production in year 1 was 8,000 hours. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

A task station that originally cost $8,000 has no estimated salvage value and was depreciated at the rate of 20% per year (straight-line depreciation). At the end of the second year, it was sold for $4,000 cash. The transaction would result in a:

The credit portion of the adjustment for the depletion of a coal mine was credited to the Coal Mine account. This error would cause:

Amortization of a patent was ignored. This error would cause:

For tax purposes, the gain or loss on a traded asset is ignored when calculating the value of the new asset.

To calculate the double declining-balance rate, you would use half the straight-line rate.

Which depreciation method does NOT use the current book value in calculating depreciation expense?

What would be the depreciation expense using double declining-balance to compute the expense for year 2 of a machine costing $30,000, when residual value is $2,000, and useful life is 3 years? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

The allocation of the cost of a intangible asset is known as:

What is the difference between an extraordinary repair and a betterment?

Assuming a useful life of five years, which of the following GAAP methods would most likely result in the most depreciation in the first year?

Under MACRS, furniture is depreciated over seven years.