Exam 10: Plant Assets Natural Resoures and Intangibles

On April 1 of the current year, a company traded an old machine that originally cost $32,000 and that had accumulated depreciation of $24,000 for a similar new machine that had a cash price of $40,000. 1. Prepare the entry to record the exchange under the assumption that a $5,000 trade-in allowance was received and the balance of $35,000 was paid in cash. Assume the exchange transaction had commercial substance. 2. Prepare the entry to record the exchange under the assumption that instead of a $5,000 trade-in allowance, a $12,500 trade-in allowance was received and the balance of $27,500 was paid in cash. Assume the exchange transaction has commercial substance.

Depreciation is higher in earlier years and income is lower in the later years when using straight-line versus accelerated methods.

Land improvements are:

Total asset turnover is calculated by dividing net sales by average total assets.

A company purchased and installed machinery on January 1 at a total cost of $93,000. Straight-line depreciation was calculated based on the assumption of a five-year life and no salvage value. The machinery was disposed of on July 1 of year four. The company uses the calendar year. 1. Prepare the general journal entry to update depreciation to July 1 in year four. 2. Prepare the general journal entry to record the sale of the machine for $27,000 cash.

Betterments are a type of capital expenditure.

__________is an estimate of an asset's value at the end of its benefit period (or useful life).

On January 2, 2010, a company purchased a delivery truck for $45,000 cash. The truck had an estimated useful life of seven years and an estimated salvage value of $3,000. The straight-line method of depreciation was used. Prepare the journal entries to record depreciation expense and the disposition of the truck on September 1, 2014, under each of the following assumptions: a. The truck and $45,000 cash were given in exchange for a new delivery truck that had a cash price of $60,000. This transaction has commercial substance. b. The truck and $40,000 cash were exchanged for a new delivery truck that had a cash price of $60,000. This transaction has commercial substance.

Salvage value is an estimate of an asset's value at the end of its benefit period.

A company discarded a computer system originally purchased for $18,000. The accumulated depreciation was $17,200. The company should recognize a(an):

The Modified Accelerated Cost Recovery System (MACRS) is part of the U.S. federal income tax laws and may be used for financial reporting.

A company purchased a mineral deposit for $800,000. It expects this property to produce 120,000 tons of minerals and to have a salvage value of $50,000. In the current year, the company mined and sold 9,000 tons of minerals. Its depletion expense for the current period equals:

A company made the following expenditures in connection with the construction of a new building: Architect's fees \ 12,000 Cash paid for land and unusable building on the land 300,000 Removal of old building 18,000 Salvage from sale of old building materials (4,000) Construction survey 1,500 Legal fees for title search 3,000 Excavation for basement construction 25,000 Machinery purchased for operations 100,000 Storage and delivery charges on machinery because building was not ready when machinery was delivered 900 Freight on machinery purchased 1,600 Construction costs of new building 1,000,000 Installation of machinery 2,500 Prepare a schedule showing the amounts to be recorded as Land, Buildings, and Machinery.

An asset's book value is $18,000 on December 31, Year 5. The asset has been depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 5 for $15,000, the company should record:

Flask Company reports net sales of $4,315 million; cost of goods sold of $2,808 million; net income of $283 million; and average total assets of $2,136. Compute its total asset turnover.

Describe the accounting for intangible assets, including their acquisition, cost allocation, and accounts involved.

The cost of an intangible asset is systematically allocated to depreciation expense over its estimated useful life.

Extraordinary repairs are expenditures extending the asset's useful life beyond its original estimate, and are capital expenditures because they benefit future periods.

A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts were produced. In the second year, production increased to 19,000 units. -Using the units-of-production method, what is the amount of accumulated depreciation at the end of the second year?

Identify the balance sheet classification of each of the following assets by placing an X in the correct classification: Plant Assets, Natural Resources, or Intangibles. Flant assets Natural Resources Intangible Assets a. Trademark b. Oil Field c. Gold mine d. Buil ding e. Franchise f.Timberland g. Patent h. Land i. Copyright j. Leasehold