Exam 8: Reporting and Analyzing Long-Lived Assets

Vickers Company uses the units-of-activity method in computing depreciation. A new plant asset is purchased for $36,000 that will produce an estimated 110,000 units over its useful life. Estimated salvage value at the end of its useful life is $3,000. What is the depreciation cost per unit?

Schrock Company purchases a new delivery van for $70,000. The sales taxes are $5,250. The logo of the company is painted on the side of the van for $1,400. The van's annual license is $140. The van undergoes safety testing for $250. What does Schrock record as the cost of the new van?

As a recent graduate of State University you're aware that IFRS requires component depreciation for plant assets. A friend has asked you to succinctly explain what component depreciation means. Which of the following correctly describes component depreciation?

If a plant asset is retired and is fully depreciated

Goodwill can be recorded

Pearson Company bought a machine on January 1, 2017. The machine cost $180,000 and had an expected salvage value of $30,000. The life of the machine was estimated to be 5 years. The depreciation expense using the straight-line method of depreciation is

All of the following are factors that a company should consider before a write-down impairment of an asset is recorded except

A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership.

Salvage value is not subtracted from plant asset cost in determining depreciation expense under the declining-balance method of depreciation.

If the proceeds from the sale of a plant asset exceed its book value, a gain on disposal occurs.

A company has the following assets: Buildings and Equipment, less accumulated depreciation of \ 4,000,000 \ 23,000,000 Copyrights 1,500,000 Patents 3,000,000 Land 5,000,000 The total amount reported under Property, Plant, and Equipment would be

Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally

If a company incurs legal costs in successfully defending its patent, these costs are recorded by debiting

Jamison, Inc. is a regional air cargo carrier. Jamison made a $4,500 improvement to one of its airplanes. If Jamison's accountant expensed this amount, which of the following statements is true?

The cost of land does not include

Under U.S. GAAP

On July 1, 2016, Fleming Company sells machinery for $240,000. The machinery originally cost $600,000, had an estimated 5-year life and an expected salvage value of $100,000. The Accumulated Depreciation account had a balance of $350,000 on January 1, 2017, using the straight-line method. The gain or loss on disposal is

When an entire business is purchased, goodwill is the excess of cost over the book value of the net assets acquired.

During 2017, Phelps Corporation reported net sales of $2,500,000, net income of $1,320,000, and depreciation expense of $80,000. Phelps also reported beginning total assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and accumulated depreciation of $500,000. Phelps's asset turnover is

Which of the following is included in the cost of constructing a building?