Exam 8: Operating Assets: Property, Plant, and Equipment, and Intangibles

Greer Company purchased land for $256,000.Additional costs include a $15,300 fee to a broker,a survey fee of $2,400,$1,750 to construct a fence,and a legal fee of $8,500.What is the cost of the land?

Surplus Warehouse purchased a forklift on January 1, 2017, for $12,000. The forklift is expected to last for five years and have a residual value of $1,200. Surplus Warehouse uses the double-declining-balance method for depreciation. Required 1.Calculate the depreciation expense,accumulated depreciation,and book value for each year of the forklift's life. 2.Analyze the impact of the entry to record depreciation expense for 2017. 3.What factors may have influenced Surplus Warehouse to use the double-declining-balance method?

Arena,Inc.uses straight-line depreciation for its equipment.Arena purchased equipment for $300,000 and estimated its useful life at eight years.The bookkeeper failed to consider the residual value of $50,000.What is the impact on earnings per share and operating income of failing to consider the residual value?

Tarkington Beers,Inc.purchased the most popular and well-known pub in a college town.Its purchase price was $1,200,000.The appraisers determined that the land should be valued at $400,000,the building at $500,000,and the equipment at $200,000.Which of the following statements is correct?

Interest is capitalized on all purchased assets.

Hu Corporation Use the following Assets section of Hu Corporation's balance sheets for the years ended December 31,2018 and 2017 to answer the questions that follow. ​ Hu Corporation recorded depreciation expense of $344 million for 2017. -Refer to the information for Hu Corporation. ? Required ? (1)Determine the book value of Hu's property,plant and equipment at December 31,2018 and 2017. ? (2)What types of transaction(s)could have caused the change in book value of property,plant,and equipment during 2018?

Hu Corporation Use the following Assets section of Hu Corporation's balance sheets for the years ended December 31,2018 and 2017 to answer the questions that follow. ​ Hu Corporation recorded depreciation expense of $344 million for 2017. -Refer to the information for Hu Corporation. ​ Required ​ (1)Which items on Hu's balance sheet could be considered intangible assets? Explain the nature of each of these. ​ (2)Explain why it is important that Hu disclose the amounts expended on research and development each year.

Interest is capitalized when incurred in connection with the construction of plant assets because

The accounting life of intangible assets is determined by

Distinguish between current assets and operating assets.

Assume that Halpern Company purchased an asset on January 1, 2016, for $122,800. The asset had an estimated life of six years and an estimated residual value of $2,200. The company used the straight-line method to depreciate the asset. Assume that Halpern Company sold the asset on July 1, 2017, and received $96,000 cash and a note for an additional $22,000. Required 1. Analyze the transaction needed to record depreciation for 2017 and for all transactions necessary for the sale of the asset. 2. How should the gain or loss on the sale of the asset be presented on the income statement?

The two items that must be estimated with respect to a plant asset in order to properly allocate cost to the affected accounting periods are _______________ and _______________.

Daytona Beach Company purchased a car for a salesman for $23,500 at the beginning of 2017.The car had an estimated life of five years,and an estimated residual value of $3,500.Daytona Beach used the straight-line depreciation method.At the beginning of 2018,Daytona Beach incurred $2,500 to replace the car's transmission.This resulted in a two-year extension of the car's useful life,but no change in the residual value. A. What type of cost is the $\$ 2,500$ ? Explain. B. Calculate the book value of the car at the end of 2017 . C. Find the depreciation expense on the car for 2018 .

Double-declining-balance depreciation is most commonly used by businesses for financial reporting purposes.

Select the financial statement on which the user would most likely find the answer to the question given. (Select all that apply.) -How much depreciation expense did the company report during the year?

Asset turnover is calculated as Net Income divided by Average Total Assets.

How are the cash flow effects from the purchase and sale of intangible assets reported on a statement of cash flows?

Which of the following costs related to the purchase of production equipment incurred by Newark Company during 2017 would be considered a revenue expenditure?

At the end of 2017,Mirror Productions determined that one of its copyrights was worthless.The copyright had a cost of $320,000.The copyright had been amortized for eight years of its estimated 25-year legal life.Which of the following statements is the justification for removing the remaining cost of the copyright from the accounting records?

A company begins construction of an asset on January 1,2017,and completes construction on December 1,2017.The company pays the following amounts related to construction: ? January 1: $1,000,000 July 1: $2,000,000 October 1: $1,000,000 ? Calculate the average accumulated expenditures for the purpose of capitalizing interest.