Exam 16: Accounting for Property, Plant, Equipment, and Intangible Assets

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, in column 3 the financial statement that the account in which the account balance is reported, and in column 4 the account's nature (permanent/temporary). -

Myers Corporation exchanged an old machine costing $20,000, with an accumulated depreciation of $17,000, and trade-in value of $5,000 for a new machine cash price of $24,000. What is the journal entry?

Ken Applegate owned equipment with an original cost of $30,000 with $20,000 of accumulated depreciation. The equipment was traded in on new equipment costing $50,000 with a trade-in allowance of $8,000 and the balance in cash. Determine the following. a. The book value of the old machine was ________. b. The loss on the exchange was ________. c. The cost basis on the books for the new machine, assuming accounting rules, is ________.

Equipment that originally cost $775 with no salvage value has accumulated depreciation of $700. The equipment is discarded. The transaction to record the discarding of the equipment would result in a:

A company purchased new computer equipment from a local vendor. An employee offered to pick up the equipment and received a speeding ticket on his way back to the office. The cost of the speeding ticket should be charged to the cost of the equipment.

Revenue expenditures include:

On January 1, 200x, Mayberry Company bought a patent for $20,000. Its estimated useful life is five years. Record the amortization for the first two years.

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, in column 3 the financial statement that the account in which the account balance is reported, and in column 4 the account's nature (permanent/temporary). -

A depreciation method that allocates depreciation of a plant asset based on the Tax Act of 1989 is the:

A car is purchased for $25,000 on January 1. It has a 4-year life and a salvage value of $1,000. Compute the annual depreciation expense using the double-declining-balance method for all 4 years.

A company purchased new machinery and incurred freight, assembly, and installation costs in addition to the invoice cost of the machinery. These additional costs should be debited to:

A budgeted item such as a building is listed as a ________.

Eagle Works traded a plant asset with a cost of $30,000 and accumulated depreciation of $25,000 for a similar asset priced at $60,000. Assuming a trade-in of $2,500, the cost basis of the new asset under income tax rules is:

A coal mine was acquired for $2,000,000. No salvage value was expected and the number of tons of coal is estimated to be 2,000,000 tons. During for first year, 220,000 tons of coal was mined and sold. The depletion expense is:

The cost of a plant asset was increased for the payment of this year's insurance premium. This error would cause:

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, in column 3 the financial statement that the account in which the account balance is reported, and in column 4 the account's nature (permanent/temporary). -

J. Long purchased computer equipment for $5,000 on January 1, 200x. It has a residual value of $500 with a useful life of 5 years. After the appropriate adjusting entries are made, the book value of the asset on December 31, 200x, under the double-declining-balance method, is:

Using MACRS rates for a 3, 5, 7, and 10-year property, what is the percentage for the depreciable rate?

A company purchases a patent for $50,000. The patent will be amortized over 5 years. The entry to record the amortization in the first year is:

For tax purposes, residential real property is depreciated using the straight-line method under MACRS.