Exam 10: Plant Assets Natural Resoures and Intangibles

The cost of land would not include:

Extraordinary repairs:

Compare the different depreciation methods (straight-line, units-of-production, and double-declining-balance) with respect to the amounts of depreciation expense per period and the total depreciation over the life of the asset.

The process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use is called depletion.

Martin Company purchases a machine at the beginning of the year at a cost of $60,000. The machine is depreciated using the double-declining-balance method. The machine's useful life is estimated to be 4 years with a $5,000 salvage value. - The machine's book value at the end of year 3 is:

How is the cost principle applied to plant asset acquisitions, including lump-sum purchases?

Asset turnover is computed by dividing net sales by average total assets.

Duncan reported net sales of $2,523 million and average total assets of $1,476 million. Its total asset turnover equals 1.71.

Since goodwill is an intangible asset, it is amortized each year using the straight-line method.

A company purchased an equipment system for $325,000 on January 2. The company expects the equipment to last for eight years or 81,250 hours of operation, with no estimated salvage value. During the first year, the equipment was in operation for 8,000 hours, while in the second year, the equipment was in operation for 8,700 hours. Compute the depreciation expense relating to the equipment for Year 1 and Year 2 using the following depreciation methods: a. Straight-line. b. Double-declining-balance. c. Units-of-production.

The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation, except at the beginning and the end of the asset's useful life, when it is the same.

A company purchased a delivery van for $28,000 with a salvage value of $3,000 on September 1, Year 1. It has an estimated useful life of 5 years. Using the straight-line method, how much depreciation expense should the company recognize on December 31, Year 1?

Riverboat Adventures pays $310,000 plus $15,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $35,000, a building appraised at $105,000, and paddleboats appraised at $210,000. -Compute the cost that should be allocated to the land.

A company paid $150,000, plus a 7% commission and $5,000 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?

The formula to compute annual straight-line depreciation is:

A company purchased mining property for $1,560,000. The property was estimated to contain 13,000,000 tons of ore. In the current year, the company removed and sold 263,000 tons of ore. Calculate the depletion expense for the current year.

When originally purchased, a vehicle costing $23,000 had an estimated useful life of 8 years and an estimated salvage value of $3,000. After 4 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. The depreciation expense in year 5 equals:

A copyright gives its owner the exclusive right to publish and sell a musical, literary, or artistic work during the life of the creator plus 17 years.

A company had net sales of $230,000 for 2015 and $288,000 for 2016. The company's average total assets for 2015 were $150,000 and $180,000 for 2016. Calculate the total asset turnover for each year and comment on the company's efficiency in the use of its assets.

Ngu owns equipment that cost $93,500 with accumulated depreciation of $64,000. Ngu asks $35,000 for the equipment but sells the equipment for $33,000. Compute the amount of gain or loss on the sale.