Exam 9: Plant and Intangible Assets

Refer to the information above. Assume that in its financial statements, Victor uses straight-line depreciation and the half-year convention. Depreciation recognized on this equipment in 2009 and 2010 will be:

Various depreciation methods-first year On March 24, 2009 Tastee Ice Cream Co. purchased equipment costing $140,000, with an estimated life of 5 years and an estimated salvage value of $20,000. Compute the depreciation expense Tastee would recognize on this equipment in 2009, assuming: (a) Straight-line depreciation using the half-year convention \_ (b) 200\% declining balance with fractional periods rounded to the nearest full month. \ \_\_\_ (c) 150\% -declining-balance, using the half-year convention \_

U. S. GAAP requires that a company should capitalize goodwill and adjust its value if subject to impairment.

Mayer Instrumentation sold a depreciable asset for cash of $300,000. The original cost of the asset was $1,200,000. Mayer recognized a gain of $45,000 on the sale. What was the amount of accumulated depreciation on the asset at the time of its sale?

When a company uses straight-line depreciation and the half-year convention, assets with a five-year life:

Cranston Instrumentation sold a depreciable asset for cash of $150,000. The original cost of the asset was $600,000. Cranston recognized a gain of $22,500 on the sale. What was the amount of accumulated depreciation on the asset at the time of its sale?

Most companies benefit by using accelerated depreciation methods for income tax purposes.

The gain or loss on the disposal of a depreciable asset reported in financial statements often differs from that reported for income tax purposes. The principal reason for the difference is:

The systematic write-off of intangible assets to expense is called depletion.

Ladd Company sold a plant asset that originally had cost $50,000 for $22,000 cash. If Ladd correctly reports a $5,000 gain on this sale, the accumulated depreciation on the asset at the date of sale must have been:

Just as there are depreciation methods to calculate the decline in value of assets, there are appreciation methods to record the increase in value of assets.

When a depreciable asset is sold at a price equal to its book value, a journal entry would include:

Which of the following situations is impossible?

An asset which costs $14,400 and has accumulated depreciation of $8,000 is sold for $5,600. What amount of gain or loss will be recognized when the asset is sold?

Charging an expenditure directly to an expense account is based on the assumption that the benefits of that expenditure have been used up in the current period.

Capital expenditures are recorded as:

Machinery acquired new on January 1 at a cost of $80,000 was estimated to have a useful life of 10 years and a residual salvage value of $20,000. Straight-line depreciation was used. On January 1, following six full years of use of the machinery, management decided that the estimate of useful life had been too long and that the machinery would have to be retired after three years, that is, at the end of the ninth year of service. Under this revised estimate, the depreciation expense for the seventh year of use would be:

Prepare journal entries for the following

Caan purchased the Stokes Mine for $60 million. The mine was estimated to contain 6 million tons of anthracite coal and to have a residual value of $12 million. During the first year of mining operations of the Stokes Mine, 800,000 tons of anthracite were mined of which 600,000 tons was sold.

For financial reporting purposes, the gain or loss on the sale of a plant asset is determined by comparing the asset's: