Exam 9: Plant Assets, Natural Resources, and Intangible Assets

Carey Company buys land for $50,000 on 12/31/14. As of 3/31/15, the land has appreciated in value to $50,700. On 12/31/15, the land has an appraised value of $51,800. By what amount should the Land account be increased in 2015?

Tomko Company purchased machinery with a list price of $96,000. They were given a 10% discount by the manufacturer. They paid $600 for shipping and sales tax of $4,500. Tomko estimates that the machinery will have a useful life of 10 years and a residual value of $30,000. If Tomko uses straight-line depreciation, annual depreciation will be

If a fully depreciated plant asset is still used by a company, the

Angie's Blooms purchased a delivery van for $40,000. The company was given a $4,000 cash discount by the dealer, and paid $2,000 sales tax. Annual insurance on the van is $1,000. As a result of the purchase, by how much will Angie's Blooms increase its van account?

Conceptually, the cost allocation procedures for natural resources parallels that of plant assets.

Yanik Company's delivery truck, which originally cost $84,000, was destroyed by fire. At the time of the fire, the balance of the Accumulated Depreciation account amounted to $57,000. The company received $48,000 reimbursement from its insurance company. The gain or loss as a result of the fire was

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?

Santayana Company purchased a machine on January 1, 2013, for $60,000 with an estimated salvage value of $15,000 and an estimated useful life of 8 years. On January 1, 2015, Santayana decides the machine will last 12 years from the date of purchase. The salvage value is still estimated at $15,000. Using the straight-line method, the new annual depreciation will be

A loss on disposal of a plant asset as a result of a sale or a retirement is calculated in the same way.

Goodwill

To determine a new depreciation amount after a change in estimate of a plant asset's useful life, the asset's remaining depreciable cost is divided by its remaining useful life.

The Accumulated Depletion account is deducted from the cost of the natural resource in the balance sheet.

The cost of land includes all of the following except

Depreciation is the process of allocating the cost of a plant asset over its service life in

In calculating depreciation, both plant asset cost and useful life are based on estimates.

Depletion 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 to prior periods.

The Accumulated Depreciation account represents a cash fund available to replace plant assets.

Able Towing Company purchased a tow truck for $180,000 on January 1, 2014. It was originally depreciated on a straight-line basis over 10 years with an assumed salvage value of $36,000. On December 31, 2016, before adjusting entries had been made, the company decided to change the remaining estimated life to 4 years (including 2016) and the salvage value to $5,000. What was the depreciation expense for 2016?

Powell's Courier Service recorded a loss of $9,000 when it sold a van that originally cost $84,000 for $15,000. Accumulated depreciation on the van must have been