Exam 10: Plant Assets, natural Resources, and Intangibles

A company had a bulldozer destroyed by fire.The bulldozer originally cost $125,000 with accumulated depreciation of $60,000.The proceeds from the insurance company were $90,000.The company should recognize:

Total asset cost plus depreciation expense equals book value.

A depreciation method in which a plant asset's depreciation expense for a period is determined by applying a constant depreciation rate to the asset's beginning-of-period book value is called:

_______________________ depreciation recognizes equal amounts of annual depreciation over the life of an asset.

_________________ refers to a plant asset that is no longer useful in producing goods or services with a competitive advantage because of new inventions and improvements.

A company purchased a rope braiding machine for $190,000.The machine has a useful life of 8 years and a residual value of $10,000.It is estimated that the machine could produce 750,000 units of climbing rope over its useful life.In the first year,105,000 units were produced.In the second year,production increased to 109,000 units.Using the units-of-production method,what is the amount of depreciation that should be recorded for the second year?

_________________________ are capital expenditures that make a plant asset more productive; they often involve adding a component to an asset or replacing one of its old components with a better one,and do not always increase an asset's life.

Another name for a capital expenditure is:

______________________ depreciation charges a varying amount to expense for each period of an asset's useful life depending on its usage.

A company paid $150,000,plus a 6% commission and $4,000 in closing costs for a property.The property included land appraised at $87,500,land improvements appraised at $35,000,and a building appraised at $52,500.What should be the allocation of this property's costs in the company's accounting records?

Match each of the following terms with the appropriate definitions. -A condition which, because of new inventions and improvements, a plant asset is no longer useful in producing goods or services with a competitive advantage.

Intangible assets include:

_____________ are the federal income tax rules for depreciating assets.

Salta Company installs a manufacturing machine in its factory at the beginning of the year at a cost of $87,000.The machine's useful life is estimated to be 5 years,or 400,000 units of product,with a $7,000 salvage value.During its second year,the machine produces 84,500 units of product.Determine the machines' second year depreciation under the straight-line method.

Plant assets are:

The Modified Accelerated Cost Recovery System (MACRS)is part of the U.S.federal income tax laws and is used for tax reporting.