Exam 10: Plant Assets,natural Resources,and Intangibles

If an asset is disposed of during the year,there is no need to calculate depreciation from the beginning of the year of disposal to the date of disposal.

Which of the following is a characteristic of a plant asset,such as a building?

When a plant asset is disposed of,the business must ________.

O'Keith Company purchased a mine on January 1,2018,for $530,000.The mine is estimated to contain 37,000 tons of iron ore.There is no residual value.The business extracted and sold 2500 tons of ore in 2018 and 19,800 tons of ore in 2019.What is the book value of the mine at the end of 2019? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

An expenditure that increases the capacity or efficiency of a plant asset or that extends the asset's life is known as a revenue expenditure.

MacMann Company purchased a mine on January 1,2018,for $500,000.The mine is estimated to contain 30,000 tons of iron ore.There is no residual value.The business has extracted and sold 2,500 tons of ore in 2018.Prepare the journal entry to record depletion expense for 2018.(Round your intermediate calculations to the nearest cent.)Omit explanation.

Which of the following is TRUE when the estimate of an asset's useful life is changed?

Ordinary repairs to plant assets are referred to as revenue expenditures.

A trademark should not be amortized over its useful life.

Maple Company had net sales of $202,550 for the year ended December 31,2017.Its beginning and ending total assets were $85,200 and $115,500,respectively.Determine Maple's asset turnover ratio for the year ended December 31,2017.(Round your answer to two decimal places.)

Annie Company purchased a computer for $5,000.During 2018 and 2019,the company recorded total depreciation of $4,000 on the computer.On January 1,2020,the company exchanges the computer for a new one,paying $4,000 cash.The market value of the new computer is $6,000.Prepare the journal entry to record this transaction.Assume the exchange has commercial substance.Omit explanation.

George Company purchased a van on May 1,2018,for $800,000.Estimated life of the van was five years,and its estimated residual value was $80,000.George uses the straight-line method of depreciation.Prepare the journal entry to record the depreciation expense for 2018 on the van.Omit explanation.

IFRS permits the presentation of plant assets at their fair market value.

Which of the following asset categories would include the cost of clearing land and removing unwanted buildings?

Claxton Company purchased a van on January 1,2018,for $820,000.Estimated life of the van was five years,and its estimated residual value was $103,000.Claxton uses the straight-line method of depreciation.At the beginning of 2020,the company revised the total estimated life of the asset from five years to four years.The estimated residual value remained the same as estimated earlier.Calculate the depreciation expense for 2020.

Brentwood Company purchased a mine in 2018 for $500,000 and estimated that 30,000 tons of iron ore could be extracted from it.There was no residual value.The business extracted and sold 2,500 tons of ore in 2018.How will the mine be reported on the balance sheet at the end of year 2018? (Round all intermediate calculations to the nearest cent.)Omit explanation.

Which of the following statements is incorrect?

Work Room Company purchased equipment for $45,000.Total depreciation of $36,000 was recorded.On January 1,2019,Work Room exchanged the equipment for new equipment,paying $65,000 cash.The market value of the new equipment is $65,000.Prepare the journal entry to record this transaction.Assume the exchange had commercial substance.Omit explanation.

On January 1,2018,Sanderson Company acquired a machine for $1,070,000.The estimated useful life of the asset is five years.Residual value at the end of five years is estimated to be $87,000.What is the book value of the machine at the end of 2019 if the company uses the straight-line method of depreciation?

Depreciation means that the business sets aside cash to replace an asset when it is used up.