Exam 9: Reporting and Analyzing Long-Lived Assets

When purchasing delivery equipment, sales taxes and motor vehicle licenses should be charged to Equipment.

Ryan, Inc. purchased a delivery truck with a $42,000 list price. The company was given a $4,200 cash discount by the dealer, and paid $2,100 sales tax. Annual insurance on the truck is $1,050. As a result of the purchase, by how much will Ryan, Inc. increase its truck account?

Indicate whether each of the following expenditures should be classified as land (L), land improvements (LI), buildings (B), equipment (E), or none of these (X). ___1. Computer installation cost ___2. Driveway cost ___3. Architect's fee ___4. Surveying costs ___5. Grading costs ___6. Cost of lighting for parking lot ___7. Insurance while in transit and freight on computer purchased ___8. Material and labor costs incurred to construct factory ___9. Cost of tearing down a warehouse on land just purchased ___10. Utility cost during first year

Three factors that affect the computation of periodic depreciation expense are (1) _______________, (2) _______________, and (3) _________________.

During 2014, Phelps Corporation reported net sales of $3,000,000, net income of $1,320,000, and depreciation expense of $80,000. Phelps also reported beginning total assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and accumulated depreciation of $500,000. Phelps's asset turnover ratio is

Equipment with a cost of $480,000 has an estimated salvage value of $30,000 and an estimated life of 4 years or 15,000 hours. It is to be depreciated using the units-of-activity method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours?

All of the following statements are false regarding depreciation except

Mitchell Corporation bought equipment on January 1, 2014. The equipment cost $180,000 and had an expected salvage value of $30,000. The life of the equipment was estimated to be 6 years. The book value of the equipment at the beginning of the third year would be

On January 1, a machine with a useful life of five years and a residual value of $40,000 was purchased for $120,000. What is the depreciation expense for year 2 under the double-declining-balance method of depreciation?

The cost of an intangible asset with an indefinite life should

A permanent decline in the market value of an asset is referred to as an impairment.

Rains Company purchased equipment on January 1 at a list price of $75,000, with credit terms 2/10, n/30. Payment was made within the discount period. Rains paid $3,750 sales tax on the equipment, and paid installation charges of $1,320. Prior to installation, Rains paid $3,000 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment?

Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally

Intangible assets are the rights and privileges that result from ownership of long-lived assets that

Equipment that cost $72,000 and on which $60,000 of accumulated depreciation has been recorded was disposed of for $18,000 cash. The entry to record this event would include a

The cost of land does not include

An overall measure of profitability is the ______________________ ratio.

If a plant asset is retired and is fully depreciated

Accountants do not attempt to measure the change in a plant asset's market value during ownership because

A plant asset was purchased on January 1 for $75,000 with an estimated salvage value of $15,000 at the end of its useful life. The current year's Depreciation Expense is $5,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $25,000. The remaining useful life of the plant asset is