Exam 8: Reporting and Analyzing Long-Lived Assets

Conley Company purchased equipment for $120,000 on January 1, 2015, and will use the double-declining-balance method of depreciation. It is estimated that the equipment will have a 5-year life and a $6,000 salvage value at the end of its useful life. The amount of depreciation expense recognized in the year 2017 will be

When estimating the useful life of an asset, accountants do not consider

The book value of a plant asset is the difference between the

A factory machine was purchased for $140,000 on January 1, 2017. It was estimated that it would have a $28,000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. If the actual number of machine hours ran in 2017 was 4,000 hours and the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2017 would be

Givens Retail purchased land for a new parking lot for $125,000. The paving cost $175,000 and the lights to illuminate the new parking area cost $60,000. Which of the following statements is true with respect to these additions?

Depreciation is the process of allocating the cost of a plant asset over its useful life in a(n)

Arnold Company purchases a new delivery truck for $45,000. The sales taxes are $2,500. The logo of the company is painted on the side of the truck for $1,200. The truck's annual license is $120. The truck undergoes safety testing for $220. What does Arnold record as the cost of the new truck?

Carpino Company purchased equipment and these costs were incurred: Cash price \ 75,000 Sales taxes 3,500 Insurance during transit 750 Installation and testing 1,500 Total costs \ 80,750 What amount should be recorded as the cost of the equipment?

The balance in the Accumulated Depreciation account represents the

Management should select the depreciation method that

A change in the estimated useful life of equipment requires

All plant assets (fixed assets) must be depreciated for accounting purposes.

Equipment costing $280,000 was destroyed when it caught on fire. At the date of the fire, the accumulated depreciation on the equipment was $112,000. An insurance check for $320,000 was received based on the replacement cost of the equipment. The entry to record the insurance proceeds and the disposition of the equipment will include a

Wesley Hospital installs a new parking lot. The paving cost $60,000 and the lights to illuminate the new parking area cost $24,000. Which of the following statements is true with respect to these additions?

All leases are classified as either

If a plant asset is sold at a gain, the gain on disposal should reduce the cost of goods sold section of the income statement.

Equipment costing $60,000 with a salvage value of $12,000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years. Assuming a revised estimated total life of 5 years and no change in the salvage value, the depreciation expense for Year 3 would be

Morton's Courier Service recorded a loss of $7,500 when it sold a van that originally cost $70,000 for $12,500. Accumulated depreciation on the van must have been

Mitchell Corporation bought equipment on January 1, 2017. The equipment cost $300,000 and had an expected salvage value of $50,000. The life of the equipment was estimated to be 6 years. The depreciable cost of the equipment is

A change in the estimated useful life of a plant asset may cause a change in the amount of depreciation recognized in the current and future periods, but not in prior periods.