Exam 10: Plant Assets, Natural Resources, and Intangibles

A patent is an exclusive right to reproduce and sell a book, musical composition, film, other work of art, or intellectual property.

On October 1, 2015, Nurix Company purchased a patent for $200,000 cash. Although the patent gives legal protection for 20 years, the patent is expected to be used for only 10 years. What will be the balance in the patent account on September 30, 2016?

Acer Investments plans to develop a shopping center. In the first quarter, they spent the following amounts: What amount should be recorded as the cost of land in the books of the company?

Which of the following asset categories would include the cost of clearing land and removing unwanted buildings?

When a business sells a plant asset for book value, a gain or loss should be recorded.

Which of the following accounting methods is usually used to compute amortization expense?

The asset turnover ratio is calculated by dividing cost of goods sold by average total assets.

On October 1, 2015, Nurix Company purchased a patent for $100,000 cash. Although the patent gives legal protection for 20 years, it is expected to be used for only eight years. Journalize the amortization expense for 2015. Assume straight-line amortization.

Which of the following depreciation methods allocates a varying amount of depreciation each year based on an asset's usage?

On January 1, 2012 Hillop Inc. had total assets of $360,000. During the year, the company purchased new machinery worth $80,000 and promised to pay the amount due after two years. Throughout the year, it earned revenue of $50,000 every month. Calculate the asset turnover ratio.

In 2015, a company purchased a small business for $250,000. The market value of the small business's assets was $400,000, and the market value of the liabilities was $200,000. The company recorded goodwill of $50,000 at the time of acquisition. At the end of 2016, it measured the goodwill and found it had a remaining fair value of only $20,000. At year-end 2016, the company will:

Which of the following costs related to a company car would be capitalized?

Companies are required to use Modified Accelerated Cost Recovery System (MACRS)for tax purposes.

The expected cash value of an asset at the end of its useful life is known as:

Which of the following is included in the cost of land?

When a plant asset is sold for a price lower than its book value, there will be a gain.

Cost of an asset is $1,000,000 and its residual value is $100,000. Estimated useful life of the asset is four years. Calculate depreciation for the second year using the double-declining-balance method of depreciation.

The type of intangible asset related to the rights of original music and media is known as:

Iverycoast Inc. purchased a van on January 1, 2015, for $800,000. Estimated life of the van was 5 years, and its estimated residual value was $90,000. Iverycoast uses the straight-line method of depreciation. Give journal entry to record the purchase of van for cash.

On January 1, 2015, Zade Manufacturing Company purchased a machine for $40,000,000. The company expects to use the machine for 24,000 hours over the next 6 years. The estimated sale value of the machine at the end of the sixth year is $40,000. The company used the machine for 3,600 hours in 2015 and 5,000 hours in 2016. Calculate depreciation expense for the year 2016 if the company uses the units-of-production method of depreciation.