Exam 9: Plant Assets and Intangibles

On September 1,2013,Algernon Company sold a truck for $15,000 cash.The truck was originally purchased for $40,000,had an estimated salvage value of $4,000 and an estimated life of 6 years.Algernon had recorded depreciation of $30,000 through the end of 2012 using the straight-line method. First,Algernon had to update the depreciation prior to sale.Then Algernon recorded the sale transaction.Please provide the journal entry to record the sale.

On January 1,2014,a company buys a truck for $42,000 cash.It has estimated residual value of $2,000,and an estimated life of 8 years,or 200,000 miles.Please provide the journal entry for the purchase of the truck.

An asset was purchased for $12,000.The asset's estimated useful life was 5 years,and its residual value was $2,000.Straight-line depreciation was used. -How much gain or loss is reported if the asset is sold for $9,000 at the end of the second year?

Which of the following items should be amortized?

A company purchased a computer on July 1,2012.The computer has an estimated useful life of 5 years and will have no salvage value.It was purchased for $10,000.It is estimated that the computer can be used for 5,000 hours.The computer was used for 450 hours during 2012.If the goal is to record higher depreciation expense in the earlier years,which method should be used?

Which of the following costs related to a company car would NOT be expensed?

On January 1,2012,a company buys equipment for $10,000.It has estimated residual value of $1,000,and an estimated life of 5 years.Assume the company uses double-declining-balance depreciation.Please complete the depreciation schedule below. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Depreciation for the Year }$ Date Asset Cost Depreciable Cost Depreciation Rate Depreciation Expense Accumulated Depreciation Book Value 1-1-2012 12-31-2012 12-31-2013 12-31-2014 12-31-2015 12-31-2016

Which of the following depreciation methods does NOT use a residual value in the depreciation formula?

A factory has a machine costing $76,000.It has a 5-year life and an estimated capacity of 160,000 parts.The salvage value of the machine is zero.Assume 35,000 parts are machined in the first year of operation.Using the units-of-production method,what is the depreciation expense in Year 1?

An asset was purchased for $12,000.The asset's estimated useful life was 5 years,and its residual value was $2,000.Straight-line depreciation was used. -How much gain or loss is reported if the asset is sold for $400 at the end of the fifth year?

Depletion is the word we use instead of depreciation to attach to recovering the cost of natural resources.

A plant asset is fully depreciated when the book value is:

The cost of excavating a basement for a new building is added to the price of the land.

Charterhouse Services purchased a van on January 1,2012,for $56,000.It has an estimated life of 5 years,and an estimated salvage value of $6,000.Charterhouse uses straight-line depreciation.At the end of 2013,what was the book value of the asset?

Job Sales traded a truck they had owned for some time plus $2,500 cash in exchange for another truck of similar type.The original truck had been purchased by Job for $36,000,and had accumulated depreciation of $30,000 at the time it was exchanged.Please provide the journal entry for this transaction.

Which of the following would be capitalized and depreciated,rather than expensed?

When an asset is fully depreciated,the salvage value must be written off.

Accelerated depreciation differs from straight-line depreciation in that depreciation expense is greater in the first year and less in the later years.

Which would NOT be accounted for by the depletion method?

Avery Sales purchased telecom equipment for $12,000 on October 1,2013.It has estimated residual value of $1,800,and an estimated life of 8 years.If Avery uses double-declining-balance depreciation,how much expense will be recorded in 2013?