Exam 9: Plant Assets and Intangibles

On January 1,2013,Zane Manufacturing Company purchased a machine for $40,000.The company expects to use the machine a total of 24,000 hours over the next 6 years.The estimated sales price of the machine at the end of 6 years is $4,000.The company used the machine 8,000 hours in 2013 and 12,000 in 2014. -What is depreciation expense for 2014 if the company uses straight-line depreciation?

Depletion expense is the portion of a natural resource's cost used up in a particular period.

Barnhart's sold a piece of restaurant equipment to another restaurant on July 1,2013 for $1,100 cash.The equipment originally cost $12,000,had an estimated life of 20 years,and estimated salvage value of $2,000.Barnhart's had recorded total depreciation of $9,000 through the end of 2012,using the straight-line method.Barnhart's had to update the depreciation of the asset before recording the sale. -How much additional depreciation expense was recorded for the period of January 1,2013 through July 1,2013?

On January 1,2013,Zane Manufacturing Company purchased a machine for $40,000.The company expects to use the machine a total of 24,000 hours over the next 6 years.The estimated sales price of the machine at the end of 6 years is $4,000.The company used the machine 8,000 hours in 2013 and 12,000 in 2014. - What is depreciation expense for 2013 if the company uses straight-line depreciation?

Corey Sales sold its old office furniture for $1,100.The original cost was $8,000,and at the time of sale,it had accumulated depreciation of $7,000.What was the effect of the transaction?

Which of the following is the proper accounting treatment for purchased goodwill?

Navajo Mining Company purchased a mine in 2013 for $3,400,000.It was estimated that the mine contained 200,000 tons of ore and that the mine would be worthless after all of the ore was extracted.The company extracted 25,000 tons of ore in 2013 and 30,000 tons of ore in 2014. What is depletion expense for 2013?

Which of the following items is included in the journal entry if a company sells equipment at a price equal to its book value?

Estimated residual value is the expected cash value of an asset at the end of its useful life.

Which of the following depreciation methods writes off more depreciation near the start of an asset's life than in later years?

Albatross Services scrapped a van.The van originally cost $40,000,had an estimated salvage value of zero,and an estimated life of 10 years.At the time it was scrapped,it had accumulated depreciation of $40,000.What was the effect of scrapping the van?

The decline in value of a copyright is accounted for by:

Treating a capital expenditure as an expense causes an understatement of net income.

Goodwill is NOT amortized-but evaluated-each year for a decline in value.

When a plant asset is sold,if the book value is higher than the sales price,there will be a loss on sale.

On January 1,2013,Zane Manufacturing Company purchased a machine for $40,000.The company expects to use the machine a total of 24,000 hours over the next 6 years.The estimated sales price of the machine at the end of 6 years is $4,000.The company used the machine 8,000 hours in 2013 and 12,000 in 2014. -What is depreciation expense for 2013 if the company uses units-of-production depreciation?

Goodwill is amortized each year,similar to other intangible assets.

Which of the following is the proper accounting treatment for research and development costs?

If goodwill decreases,the company records a loss and writes down the value of the goodwill.

On January 1,2012,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. -If the company uses double-declining-balance depreciation,please show the journal entry for the first year depreciation.