Exam 11: Investments in Noncurrent Operating Assets-Utilization and Retirement

Underwood Company purchased a machine on January 2,2013,for $1,000,000.The machine has an estimated useful life of five years and a salvage value of $100,000.Depreciation was computed by the 150% declining-balance method.The accumulated depreciation balance at December 31,2014,should be

Winwood Construction purchased a crane on January 1,2013,for $102,750.At the time of purchase,the crane was estimated to have a life of six years and a residual value of $6,750.In 2015,Winwood determined that the crane had a total useful life of seven years and a residual value of $4,500.If Winwood uses the straight-line method of depreciation,what will be the depreciation expense for the crane in 2015?

On June 30,2014,a fire in Walnut Company's plant caused the total loss of a production machine.The machine was being depreciated at $20,000 annually and had a carrying amount of $160,000 at December 31,2013.On the date of the fire,the fair value of the machine was $220,000,and Walnut received insurance proceeds of $200,000 in October 2014.In its income statement for the year ended December 31,2014,what amount should Walnut recognize as a gain or loss on disposition?

On January 1,2010,Elaine Company purchased for $600,000,a trademark with an estimated useful life of 16 years.In January 2014,Elaine paid $90,000 for legal fees in a successful defense of the trademark.Trademark amortization expense for the year ended December 31,2014,should be

Lex Soaps purchased a machine on January 1,2013,for $18,000 cash.The machine has an estimated useful life of four years and a salvage value of $4,700.Lex uses the double-declining-balance method of depreciation for all its assets.What will be the machine's book value as of December 31,2014?

Which of the following utilizes the straight-line depreciation method?

Which of the following statements is the assumption on which straight-line depreciation is based?

Depreciation of noncurrent operating assets is an accounting process for the purpose of

On December 2,2014,Loofa Company,which operates a furniture rental business,traded in a used delivery truck with a carrying amount of $5,400 for a new delivery truck having a list price of $16,000 and paid a cash difference of $7,500 to the dealer.The used truck had a fair value of $6,000 on the date of the exchange.The exchange has commercial substance.At what amount should the new truck be recorded on Loofa's books?

Mantle Company exchanged a used autograph-signing machine with Maris Company for a similar machine with less use.Mantle's old machine originally cost $50,000 and had accumulated depreciation of $40,000,as well as a market value of $40,000,at the time of the exchange.Maris' old machine originally cost $60,000 and at the time of the exchange had a book value of $30,000 and a market value of $32,000.Maris gave Mantle $8,000 cash as part of the exchange.The exchange lacked commercial substance.Mantle should record the cost of the new machine at

On January 1,2014,Jameson Company purchased equipment at a cost of $420,000.The equipment was estimated to have a useful life of five years and a salvage value of $60,000.Jameson uses the sum-of-the-years'-digits method of depreciation.What should the accumulated depreciation be at December 31,2017?

In January 2014,Router Mining Corporation purchased a mineral mine for $7,200,000 with removable ore estimated by geological surveys at 4,320,000 tons.The property has an estimated value of $720,000 after the ore has been extracted.Router incurred $2,160,000 of development costs preparing the property for the extraction of ore.During 2014,540,000 tons were removed and 480,000 tons were sold.For the year ended December 31,2014,Router should include what amount of depletion in its cost of goods sold?

Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

The Chisholm Company purchased a machine on November 1,2005,for $148,000.At the time of acquisition,the machine was estimated to have a useful life of ten years and an estimated salvage value of $4,000.Chisholm has recorded monthly depreciation using the straight-line method.On July 1,2014,the machine was sold for $13,000.What should be the loss recognized from the sale of the machine?

The composite depreciation method

The following is a schedule of machinery owned by Stanton Manufacturing Company. Stanton computes depreciation on the straight-line basis.Based on the information presented,compute the: (1)Composite life of these assets (in years). (2)Composite depreciation rate.

In 2013,Bootcamp Mining Inc.purchased land for $5,600,000 that had a natural resource supply estimated at 4,000,000 tons.When the natural resources are removed,the land will have an estimated value of $640,000.The present value of the expected cash outflows for the required restoration cost for the property is estimated to be $800,000. Development and road construction costs on the land were $560,000,and a building was constructed at a cost of $88,000 with an estimated $8,000 salvage value when all the natural resources have been extracted. During 2014,additional development costs of $272,000 were incurred,but additional resources were not discovered.Production for 2013 and 2014 was 700,000 tons and 900,000 tons,respectively. Compute the depletion charge for 2013 and 2014.(Include depreciation on the building,if any,as a depletion charge.)Round depletion charge to the nearest cent.

In January 2014,Bevis Company exchanged an old machine,with a book value of $256,000 and a fair value of $260,000,and paid $40,000 cash for a similar used machine having a fair value of $300,000.The exchange lacked commercial substance.At what amount should the machine acquired in the exchange be recorded on Bevis' books?

At the start of its business,Londres Corp.decided to use the composite method of depreciation and prepared the following schedule of machinery owned. Londres computes depreciation on the straight-line method.Based on the information presented,the composite life of these assets (in years)should be

Information needed to compute a depletion charge per unit includes the