Exam 9: Plant and Intangible Assets

If a piece of equipment is dropped and damaged during installation,the cost of repairing the damage should be added to the cost of the equipment.

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

An asset which costs $18,800 and has accumulated depreciation of $6,000 is sold for $11,600.What amount of gain or loss will be recognized when the asset is sold?

Prepare journal entries for the following:

Ding Company traded in one of its automobiles for a newer model.This transaction may result in a gain or a loss being recorded on Ding's financial statements.

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.

Which of the following should not be treated as a revenue expenditure?

Determining cost of plant assets New equipment was purchased by Hunter Corporation at a list price of $94,000,with credit terms of 2/10,n/30.Payment was made within the discount period and included $7,800 sales tax in addition to the net purchase price.The company also paid delivery charges of $940 and labor costs of $1,380 for installing the new equipment at the appropriate location.During installation,an inexperienced employee punctured several containers with a forklift,causing damage to the equipment.Cost to repair the damage was $1,960.What is the total cost of Hunter's equipment?

Various depreciation methods--two years On September 6,2014,East River Tug Co.purchased a new tugboat for $400,000.The estimated life of the boat was 20 years,with an estimated residual value of $40,000. Compute the depreciation on this tugboat in 2014 and 2015 using the following methods.Apply the half-year convention.(If necessary,round to the nearest dollar.)

Expenditures for research and development intended to lead to new products of commercial value:

In February 2015,Brilliant Industries purchased the Topaz Mine at a cost of $10,000,000.The mine is estimated to contain 500,000 carats of stone and to have a residual value of $500,000 after mining operations are completed.During 2015,50,000 carats of stone were removed from the mine and sold.In this situation:

A gain is recognized on the disposal of plant assets when:

Which of the following situations is impossible?

Armstrong Company recently acquired a new computer system.Which of the following costs associated with the computer should not be debited to the Equipment account?

Responsibility for selection of the depreciation methods used in financial reporting rests with:

In February 2015,Gemstone Industries purchased the Opal Mine at a cost of $20,000,000.The mine is estimated to contain 500,000 carats of stone and to have a residual value of $1,000,000 after mining operations are completed.During 2015,50,000 carats of stone were removed from the mine and sold.In this situation:

A revenue expenditure is recorded in an expense account.

The formula for the double-declining balance method of computing depreciation expense is: Remaining book value times the straight line rate.

The journal entry to record depreciation expense consists of a debit to the asset being depreciated and a credit to Accumulated Depreciation.

Computation of goodwill Chopin Corporation has net assets (total assets minus total liabilities)valued at $880,000 and has earned an average net income of $132,000 per year for the past several years.Sands Company is negotiating the purchase of the company and has agreed to pay an amount equal to the value of the net identifiable assets,assume the liabilities,and pay a sum for goodwill equal to the earnings in excess of 12% on net assets,expected to continue for five years.What is the amount for goodwill Sands is including in its offer? $_______________.