Exam 8: Reporting and Analyzing Long-Lived Assets

The Land account would include all of the following costs except

Once cost is established for a plant asset, it becomes the basis of accounting for the asset unless the asset appreciates in value, in which case, market value becomes the basis for accountability.

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 book value of the machine at the beginning of the third year would be

Under the double-declining-balance method, the depreciation rate used each year remains constant.

If disposal of a plant asset occurs during the year, depreciation is

Equipment that cost $90,000 and on which $50,000 of accumulated depreciation has been recorded was disposed of for $45,000 cash. The entry to record this event would include a

When purchasing delivery equipment, sales taxes and motor vehicle licenses should be charged to Equipment.

A company sells a plant asset that originally cost $375,000 for $125,000 on December 31, 2017. The accumulated depreciation account had a balance of $150,000 after the current year's depreciation of $37,500 had been recorded. The company should recognize a

The cost of an intangible asset with an indefinite life should

Ordinary repairs should be recognized when incurred as revenue expenditures.

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 depreciation expense using the straight-line method of depreciation is

The book value of a plant asset is always equal to its fair market value.

Jack's Copy Shop bought equipment for $240,000 on January 1, 2016. Jack estimated the useful life to be 3 years with no salvage value, and the straight-line method of depreciation will be used. On January 1, 2017, Jack decides that the business will use the equipment for a total of 5 years. What is the revised depreciation expense for 2017?

A computer company has $4,000,000 in research and development costs. Before accounting for these costs, the net income of the company is $4,800,000. What is the amount of net income or loss before taxes after these research and development costs are accounted for?

When an asset is sold, a gain occurs when the

A gain or loss on disposal of a plant asset is determined by comparing the

In 2017, Blanchard Corporation has plant equipment that originally cost $120,000 and has accumulated depreciation of $48,000. A new processing technique has rendered the equipment obsolete, so it is retired. Which of the following entries should Blanchard use to record the retirement of the equipment? a. Loss on Disposal of Plant Assets 72,000 Equipment 72,000 b. Accumulated Depreciation - Equipment 48,000 Loss on Disposal of Plant Assets 72,000 Equipment 120,000 c. Equipment Loss on Disposal of Plant Assets 72,000 Accumulated Depreciation - Equipment 72,000 d. Plant Equipment 120,000 Accumulated Depreciation - Equipment 48,000 Loss on Disposal of Plant Assets 72,000

An expenditure for which of the following items would be considered a revenue expenditure?

Recording depreciation each period is necessary in accordance with the

Equipment was purchased for $85,000 on January 1, 2016. Freight charges amounted to $3,500 and there was a cost of $10,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $15,000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2017, if the straight-line method of depreciation is used?