Exam 8: Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

On January 1,2019,Woodstock,Inc.purchased a machine costing $40,000.Woodstock also paid $1,000 for transportation and installation.The expected useful life of the machine is 6 years and the residual value is $5,000. If Woodstock uses the straight-line depreciation method,which of the following statements is incorrect?

Hill Inc.purchased an asset on January 1,2019.Hill chose an accelerated depreciation method to depreciate the asset.Which of the following is correct if Hill would have chosen the straight-line depreciation method instead?

Use of the double-declining-balance method of depreciation results in increasing amounts of depreciation expense over an asset's life.

Which of the following describes the effect of recording depreciation expense at year-end?

Which of the following properly describes the accounting for goodwill?

Bennett Corporation sold a piece of equipment on June 30,2019,for $50,000 cash.The equipment had been purchased on January 1,2015,for $150,000.The equipment had an estimated useful life of 6 years and a $30,000 residual value.Bennett Corp.has been using the straight-line method of depreciation and has a year-end of December 31st. Prepare any necessary journal entries on June 30,2019,assuming that 2019 depreciation expense has not been recorded.

Schager Company purchased a computer system on January 1,2019,at a cash cost of $25,000.The estimated useful life is 10 years,and the estimated residual value is $3,000.The company will use the double declining-balance depreciation method. What is the accumulated depreciation balance as of December 31,2020?

Warren Company plans to depreciate a new building using the double declining-balance depreciation method.The building cost is $800,000.The estimated residual value of the building is $50,000 and it has an expected useful life of 25 years. What is the building's book value at the end of the first year?

In Year 4,Landmark Restaurants reported the cost of property and equipment at $1,189.8 million and the accumulated depreciation at $224.2 million.In that same year,Coca Cola reported $10,149 million in long-lived,productive assets and accumulated depreciation on them of $4,058. A.Estimate the approximate percent of remaining life of the assets for Landmark and Coca Cola. B.Which company appears to have newer assets with longer remaining lives?

Which of the following properly describes the accounting for a patent?

On January 1,2019,Trenton Company purchased a machine costing $50,000.Trenton also incurred the following costs: transportation,$1,000;installation,$2,000;and sales tax,$3,000. Prepare the journal entry to record the machine acquisition assuming cash was paid.

Tangible long-lived productive assets differ from intangible long-lived productive assets in that tangible assets have physical substance whereas intangible assets have no physical substance.

Which of the following statements about the Modified Accelerated Cost Recovery System (MACRS)is correct?

Determine the effect of the following transactions on the financial statement components identified.Code each item listed under the transaction with the letter A,B,or C,as follows. A.If the transaction results in an increase in the financial statement component. B.If the transaction results in a decrease in the financial statement component. C.If the transaction does not affect the financial statement component. Transaction 1: The adjusting journal entry to record depreciation expense was properly prepared and recorded. Net income _____ Total assets _____ Stockholders' equity _____ Transaction 2: The adjusting journal entry to record patent amortization expense was properly prepared and recorded. Net income _____ Total assets _____ Stockholders' equity _____ Transaction 3: A depreciable asset was sold for a gain and properly recorded. Net income _____ Total assets _____ Stockholders' equity _____ Transaction 4: The adjusting journal entry to record an impairment loss was properly prepared and recorded. Net income _____ Total assets _____ Stockholders' equity _____

Which of the following statements is correct?

On January 1,2019,Wasson Company purchased a delivery vehicle costing $40,000.The vehicle has an estimated 6-year life and a $4,000 residual value. Wasson uses the units-of-production depreciation method and Wasson estimates that the vehicle will be driven 100,000 miles.What is the vehicle's book value as of December 31,2020,assuming the vehicle was driven 10,000 miles during 2019 and driven 18,000 miles during 2020?

Salvia Company recently purchased a truck.The price negotiated with the dealer was $40,000.Salvia also paid sales tax of $2,000 on the purchase,shipping and preparation costs of $3,000,and insurance for the first year of operation of $4,000.At what amount should the truck be recorded on the balance sheet prior to recording depreciation expense?

Hubbard Company purchased a truck on January 1,2018,at a cost of $34,000.The company estimated that the truck would have a useful life of 4 years and a residual value of $4,000. A.Calculate depreciation expense under straight line and double declining balance for 2018-2021. B.Which of the two methods would result in lower net income in 2018 and 2021?

The equipment cost initially reported on the balance sheet includes the equipment-related installation and transportation costs.

On January 1,2019,Wasson Company purchased a delivery vehicle costing $40,000.The vehicle has an estimated 6-year life and a $4,000 residual value. What is the vehicle's book value as of December 31,2020,assuming Wasson uses the straight-line depreciation method?