Exam 9: Investments: Property, Plant, and Equipment and Intangible Assets

Johnston Company's financial statements on December 31, 2012, showed the following: Given this information, Johnston Company's fixed asset turnover ratio for 2012 was (round to two decimal places)

On January 1, 2010, Mena Co. purchased a new machine for $2,000,000. The machine has an estimated useful life of 5 years and a salvage value of $200,000. Mena uses the sum-of-the-years'-digits method of depreciation. The amount of depreciation expense for 2012 is

Which of the following depreciation methods applies a uniform depreciation rate each period to an asset's book value?

The exclusive right to use a certain name or symbol is called a

The fixed asset turnover ratio is interpreted as the

Assume a company enters into a capital lease on January 1, 2012, to acquire the use of a machine for 5 years. The present value of the lease payments is $60,000, and the interest rate is 12 percent. If annual rental payments of $18,000 are due at the end of each year, the journal entry to record the first annual payment on December 31, 2012, would include a debit to

The caption "property, plant, and equipment" generally includes

On January 1, 2012, Alberta Company purchased land and a building for $1,120,000. At the time of the purchase, it was estimated that the building had a market value of $700,000. On January 5, Alberta installed a fence around the property at a cost of $7,000. Given this information, the journal entry to record the purchase of the land and building would include a

On September 1, 2012, Tan Party Supplies purchased catering equipment for $4,680. The equipment is estimated to have a useful life of 8 years and no salvage value. If Tan selected the sum-of-the-years'-digits method, what will be the depreciation expense for 2012?

The straight-line depreciation method usually provides for a higher amount of depreciation expense during the last year of an asset's life than does

Tanner Company purchased a building during 2010 for $600,000. From 2010 to 2012, $240,000 of depreciation was recorded. The current fair value is $350,000 and the sum of future cash flows from the building is $370,000. The amount of impairment that should be recognized is

On January 1, 2012, Bushong Company purchased equipment at a cost of $12,600. The equipment had an estimated useful life of 6 years or 30,000 hours. The equipment will have a $1,200 salvage value at the end of its life. The depreciation expense for the year ending December 31, 2012, using the straight-line method would be

On May 1, 2011, Dominquez Inc. purchased equipment at a cost of $280,000. The equipment has an estimated salvage value of $12,000 and is being depreciated over an estimated life of six years. The company's policy is to recognize depreciation to the nearest whole month. Compute the depreciation expense (rounded to the nearest dollar) on this equipment for the years ended December 31, 2011 and 2012, using a. Double-cleclining-balance b. Sum-of-the-years-digits c. Straight line

Radner Shipping purchased a truck and a trailer for $54,000. An appraisal has set the fair market values of the truck and the trailer at $19,000 and $38,000, respectively. At what amount should Radner record the truck?

Assets that are NOT acquired for resale, but used by a business to generate revenues, are

Which depreciation method usually allows the highest amount of net income to be reported during the first year an asset is owned?

Rapid Deliveries purchased a delivery truck on July 1, 2012, at a cost of $16,800. The truck has an estimated useful life of 4 years or 40,000 miles and a salvage value of $1,200. If the truck was driven 5,200 miles during 2012, the depreciation expense for 2012 under the units-of-production method would be

The balance sheet category "intangible assets" includes

On January 1, 2012, Bushong Company purchased equipment at a cost of $12,600. The equipment had an estimated useful life of 6 years or 30,000 hours. The equipment will have a $1,200 salvage value at the end of its life. The equipment was used 6,500 hours in 2012. The depreciation expense for the year ending December 31, 2012, using the units-of-production method would be

Which of the following is a criterion for a capital expenditure?