Exam 10: Plant Assets, natural Resources, and Intangibles

A company's accountant capitalized a payment that should have been recorded as a revenue expenditure.How will this error affect the company's financial statements?

Nobells Corp.has acquired land and paid $500 as brokerage to acquire the land.However,the company's accountant has recorded the $500 as a revenue expenditure.What is the effect of this error?

A photocopier cost $95,000 when new and has accumulated depreciation of $90,000.If the business discards this plant asset,the result is ________.

Radar,Inc.purchased a van on January 1,2016,for $830,000.Estimated life of the van was five years,and its estimated residual value was $96,000.Radar uses the straight-line method of depreciation.At the beginning of 2018,the corporation revised the total estimated life of the asset from five years to six years.The estimated residual value remained the same as estimated earlier.Calculate the depreciation expense for 2018.

Depletion expense should not be recorded for natural resources because they do not decrease in value over time.

Ivorycoast,Inc.purchased a van on January 1,2017,for $890,000.Estimated life of the van was five years,and its estimated residual value was $98,000.Ivorycoast uses the straight-line method of depreciation.Calculate the book value of the van at the end of 2017.

Businesses are required to use Modified Accelerated Cost Recovery System (MACRS)for tax purposes.

O'Reilly Corp.purchased a mine on January 1,2016,for $539,000.The mine is estimated to contain 38,000 tons of iron ore.There is no residual value.The business extracted and sold 14,500 tons of ore in 2016 and 14,800 tons of ore in 2017.What is the book value of the mine at the end of 2017? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

On January 1,2016,Martini,Inc.acquired a machine for $1,030,000.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 2017 if the company uses the straight-line method of depreciation?

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.

On October 1,2017,Nurix,Inc.purchased a patent for $200,000 cash.Although the patent gives legal protection for 20 years,the patent is expected to be used for only 10 years.What will be the balance in the patent account on September 30,2018?

The asset turnover ratio is calculated by dividing cost of goods sold by average total assets.

Safari Corporation has acquired a property that included both land and a building for $500,000.The corporation paid cash.The corporation hired an appraiser who has determined that the market value of the land is $300,000 and that of the building is $400,000.Journalize the lump-sum purchase.

Bingo Corporation has acquired a property that included both land and a building for $520,000.The corporation hired an appraiser who has determined that the market value of the land is $320,000 and that of the building is $400,000.At what amount should the corporation record the cost of the building? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

A lump-sum purchase or basket purchase involves paying a single price for several assets as a group.

Maple Corp.had net sales of $217,550 for the year ended December 31,2017.Its beginning and ending total assets were $94,200 and $113,500,respectively.Determine Maple's asset turnover ratio for the year ended December 31,2017.(Round your answer to two decimal places. )

Water Drops,Inc.purchased equipment for $200,000.The company recorded total depreciation of $140,000.On January 1,2017,the company exchanges the equipment for new equipment,paying $150,000 cash.The fair market value of the new equipment is $250,000.Prepare the journal entry to record this transaction.Assume the exchange has commercial substance.

Clayton,Inc.purchased a van on January 1,2016,for $830,000.Estimated life of the van was five years,and its estimated residual value was $90,000.Clayton uses the straight-line method of depreciation.At the beginning of 2018,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 2018.

Roberts Construction Group paid $11,000 for a plant asset that had a market value of $20,500.At which of the following amounts should the plant asset be recorded?

For each of the following expenditures,indicate whether the amount is debited to an asset account or to an expense account.