Exam 10: Long -Term Assets

Equipment costing $60,000 with a residual value of $6,000 and an estimated life of eight years has been depreciated using the straight-line method for two years.Assuming a revised estimated total life of five years,the depreciation expense for year 3 would be

On January 1,a machine with a useful life of five years and a residual value of $4,500 is purchased for $22,500.What is the depreciation expense in year 2 using the double-declining-balance method?

Which of the following statements is true about successful efforts accounting?

The cost of a long-term asset is expensed

Overhauling a company's cooling system is an example of an extraordinary repair.

A $750 gain on the sale of an asset means that $750 in cash was received.

The entire cost of developing computer software should be capitalized and amortized over the software's useful life.

A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of on January 1.If the truck was discarded as having no value,the entry to record this event includes

A building not currently used because economic conditions have limited a company's expansion is classified as an investment.

A revenue expenditure results in the immediate recognition of an expense.

The Land account would include all of the following costs except

Mozilla Mining Company purchased land containing an estimated 10,000,000 tons of ore for a cost of $750,000.The land without the ore is estimated to be worth $150,000 (the residual value).Buildings costing $45,000 with an estimated useful life of 20 years were erected on the site.Because of the remote location,the buildings have no residual value.The company expects that all the usable ore can be mined in eight years.During its first year of operation,the company mined 1,000,000 tons of ore and at the end of the year had an inventory of 200,000 tons.Determine the following amounts for the first year: (a)depletion charge per ton; (b)depletion expense for year;and (c)depreciation expense for buildings,using the straight-line method.(Show your work. )

Partial-year depreciation may be rounded to the nearest whole month or the half-year convention may be used.

A company purchases an oil well for $400,000.It estimates that the well contains 500,000 barrels,has a ten-year life,and has no salvage value.If the company extracts and sells 40,000 barrels during the first year,how much depletion expense should be recorded?

In 2014,Mansfield Mining purchased a mineral deposit for $12,000,000.It is estimated that 15,000,000 tons can be extracted from the mine.Calculate depletion expense during 2014 assuming 800,000 tons were extracted and 700,000 tons were sold.

According to generally accepted accounting principles,the proper accounting treatment for the cost of a trademark that management feels will retain its value indefinitely is to

Computation of a partial year's depreciation is often required for the proper determination of net income.

Boulder Company had net cash flows of $150,000 from operating activities.It extended $60,000 for purchases of plant assets,sold plant assets for $5,000,and paid dividends of $70,000.The company's free cash flow is

The cost of land should not include accrued property taxes paid by the purchaser.

Plant assets used in conjunction with a natural resource typically are depreciated