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

Boston Corp.purchased equipment with a cost of $70,000 at the beginning of 2017.The equipment has an estimated life of 25 years or 25,000 units of product.The estimated residual value is $7,500.During 2017,1,100 units of product were produced with this machinery.Determine the following: A. Amount of total accumulated depreciation at December 31,2017 , using units-of-production deprecia B. Book value at the end of 2017 using straight-line depreciation C. Why would the company choose units-of-production depreciation instead of straight-line?

__________ depreciation is the GAAP depreciation method considered to be "accelerated" in nature.

Select the financial statement on which the user would most likely find the answer to the question given. (Select all that apply.) -Did the company purchase any intangible assets during the year?

How should intangible assets be disclosed on the balance sheet?

Why is depreciation added to net income in the Operating Activities category of the statement of cash flows when the indirect method is used?

A revenue expenditure is deducted from the cost of the asset.

Hawk Company purchased an asset on January 1,2015,for $10,000.The asset was expected to have a ten-year life and a $1,000 salvage value.The company uses the straight-line method of depreciation.On January 1,2017,the company made a major repair to the asset of $5,000,extending its life.The asset is expected to last ten years from January 1,2017.Calculate the amount of depreciation for 2017.

Royal Company purchased a dump truck at the beginning of 2015 at a cost of $60,000.The truck had an estimated life of six years and an estimated residual value of $24,000.On January 1,2016,the company made major repairs of $20,000 to the truck that extended the life one year.Thus,starting with 2017,the truck has a remaining life of five years and a new salvage value of $8,000.Royal uses the straight-line depreciation method.What is the book value of the truck to be reported on the balance sheet at December 31,2017?

Given below are several accounts and balances from Carrier Corporation's 2017 financial statements.Prepare the Property,Plant,and Equipment section of the balance sheet and a partial income statement in the space provided below using the accounts provided. ? Depreciation expense 59,800 Accumulated depreciation 257,400 Gain on sale of plant asset 19,500 Building 585,000 Land 120,000 Cash received from sale of plant asset 52,000

All intangible assets should be amortized.

Many companies use accelerated depreciation for

Depreciation has no effect on income taxes,since it only reduces a plant asset's book value.

International accounting standards require companies to revalue their property,plant,and equipment to reflect fair market values.

Which of the following items is added to net income to determine cash flows from operating activities when the indirect method is used to prepare the Operating Activities category of the statement of cash flows?

All operating assets,except land,are subject to depreciation,amortization,or depletion.

Chambersburg Corp. The following information is for Chambersburg Corp.for 2018 and 2017.Chambersburg uses the straight-line depreciation method. Property, plant, and equipment \ 250,000 \ 190,000 Accumulated depreciation 100,000 85,000 Depreciation expense 62,500 47,500 Net sales 1,000,000 900,000 Average total assets 625,000 475,000 -Refer to the information for Chambersburg Corp. ? Using the 2018 data,what is the average age of Chambersburg's property,plant,and equipment?

Dayton Ridge Co.purchased new trucks at the beginning of 2017 for $600,000.The trucks had an estimated life of four years and an estimated residual value of $50,000.Dayton Ridge uses straight-line depreciation.At the beginning of 2018,Dayton Ridge sold the trucks for $480,000 and purchased new trucks for $700,000.Determine the following amounts: A. Book value of the trucks at the end of 2017 . B. Gain (loss) on the sale of the trucks at the beginning of 2018. (Indicate the amount and whether again or loss.)

You have just received an email from the new staff person,Jennifer Lark.She has just started working in the Fixed Assets Department of your company.She would like to know under what circumstances she should capitalize interest as part of the cost of an asset.In a brief memo,explain the issues to Ms.Lark.

Which of the following sets of factors is needed to calculate depreciation on plant and equipment?

Foxrun,Inc.purchased a truck at the beginning of 2017 for $32,500.Foxrun decided to depreciate the truck over an eight-year period using the straight-line method,and estimated its residual value to be $4,500.At the beginning of 2018,Foxrun determined that a five-year life should have been used to depreciate the truck.The estimated residual value was not affected by the revision in the asset's life. A. Determine the amounts to be recorded as depreciation expense for 2017 and 2018 B. What factors may have influenced Foxnun to change the useful life?