Exam 9: Plant and Intangible Assets

Material gains and losses from the disposal of plant and equipment are shown on the income statement as part of income from operations.

Which of the following situations is impossible?

Gloucester Associates sold office equipment for cash of $142,000.The accumulated depreciation at date of sale amounted to $138,000,and a gain of $18,000 was recognized on the sale.The original cost of the asset must have been:

In the early years of an asset's life,straight-line depreciation will cause a company to report higher profits than would be reported with an accelerated depreciation method.

Natural resources such as oil or minerals are categorized as intangible assets.

Capital expenditures are recorded as:

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

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?

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

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

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

An accelerated depreciation method:

Early in the current year,Tokay Co.purchased the Silverton Mine at a cost of $20,000,000.The mine was estimated to contain 200,000 tons of ore and to have a residual value of $5,000,000 after mining operations are completed.During the year,105,000 tons of ore were removed from the mine.At year-end,the book value of the mine (cost minus accumulated depletion)is:

[The following information applies to the questions displayed below.] On April 2,2017,Victor,Inc.acquired a new piece of filtering equipment.The cost of the equipment was $160,000 with a residual value of $20,000 at the end of its estimated useful lifetime of 4 years. -Assume that in its financial statements,Victor uses straight-line depreciation and rounds depreciation for fractional years to the nearest whole month.Depreciation recognized on this equipment in 2017 and 2018 will be:

The term "plant assets" refers to long-lived assets acquired for use in business operations,rather than for resale to customers.

In the early years of an asset's life,an accelerated depreciation method results in a more conservative balance sheet amount for the asset and a more conservative net income amount.

Which depreciation method is most commonly used among publicly owned corporations?

All of the following may be considered intangible assets except:

Book value represents the cost of an asset that has already been allocated to expense.

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.