Exam 9: Plant and Intangible Assets

Which of the following would not be amortized?

When comparing the units-of-output method of depreciation with straight-line depreciation:

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:

It is an acceptable accounting practice to treat an expenditure that is not material in dollar amount as an expense of the current period even though the expenditure may benefit several periods.

Suffolk Associates sold office furniture for cash of $42,000.The accumulated depreciation at the date of sale amounted to $38,000,and a gain of $18,000 was recognized on the sale.The original cost of the asset must have been:

The term net identifiable assets means:

For depreciable property other than real estate,MACRS is based upon:

Early in the current year,Amazon Co.purchased the Rio Silver Mine at a cost of $30,000,000.The mine was estimated to contain 400,000 tons of ore and to have a residual value of $7,500,000 after mining operations are completed.During the year,115,000 tons of ore were removed from the mine.At year-end,the book value of the mine is:

Which of the following would not be considered as part of the cost of equipment recently purchased?

The erroneous recording of a revenue expenditure as a capital expenditure will cause an overstatement of net income for the period.

Gains and losses in financial statements and tax returns Explain why the amount of gain or loss resulting from the sale of a depreciable asset usually differs between the seller's financial statements and income tax return.In which of these accounting reports is the gain usually larger (or the loss smaller)? Explain your reasoning.

Wanda Company sold an asset for $10,000 on September 6,2015.The historical cost of the asset was $22,000,and the asset's accumulated depreciation at the date of sale was $14,500.Which of the following statements is correct?

In the fixed-percentage-of-declining-balance depreciation method,the book value of the asset is multiplied by:

The adjusting entries to record depreciation or amortization expense or to write down assets that have become impaired:

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?

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

Which of the following is a capital expenditure?

Land is purchased for $456,000.Additional costs include a $30,300 fee to a broker,a survey fee of $3,400,$2,750 to construct a fence,and a legal fee of $12,500.What is the cost of the land?

Depreciation and disposal--a comprehensive problem Domino,Inc.uses straight-line depreciation with a half-year convention in its financial statements.On March 10,2010,Domino acquired a computer system at a cost of $98,800.Estimated useful life is six years,with residual value of $5,200. (a)Complete the following schedule,showing depreciation expense Domino expects to recognize each year in the financial statements. (b)Assume Domino sells the computer system on October 3,2013,for $26,650.

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