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

Nicklaus Company has decided to sell one of its old machines on June 30, 2015. The machine was purchased for $200,000 on January 1, 2011, and was depreciated on a straight-line basis for 10 years with no salvage value. If the machine was sold for $65,000, what was the amount of the gain or loss recorded at the time of the sale?

The declining-balance method of depreciation produces

Hull Company acquires land for $86,000 cash. Additional costs are as follows: Removal of shed \ 300 Filling and grading 1,500 Salvage value of lumber of shed 120 Broker commission 1,130 Paving of parking lot 10,000 Closing costs 560 Hull will record the acquisition cost of the land as

Identify the item below where the terms are not related.

An exchange of plant assets has commercial substance if the future cash flows change as a result of the exchange.

Ordinary repairs are expenditures to maintain the operating efficiency of a plant asset and are referred to as

The book value of an asset is equal to the

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

A plant asset cost $288,000 and is estimated to have a $36,000 salvage value at the end of its 8-year useful life. The annual depreciation expense recorded for the third year using the double-declining-balance method would be

Recording depreciation on plant assets affects the balance sheet and the income statement.

A plant asset was purchased on January 1 for $100,000 with an estimated salvage value of $20,000 at the end of its useful life. The current year's Depreciation Expense is $10,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $50,000. The remaining useful life of the plant asset is

A loss on the exchange of plant assets occurs when the fair value of the old asset is less than its book value.

An asset was purchased for $250,000. It had an estimated salvage value of $50,000 and an estimated useful life of 10 years. After 5 years of use, the estimated salvage value is revised to $40,000 but the estimated useful life is unchanged. Assuming straight-line depreciation, depreciation expense in year 6 would be

Depletion expense is reported in the income statement as an operating expense.

In computing depreciation, salvage value is

The cost of a new asset acquired in an exchange that has commercial substance is the cash paid plus the

Recording depreciation each period is an application of the expense recognition principle.

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

A patent

The declining-balance method of depreciation is called an accelerated depreciation method because it depreciates an asset in a shorter period of time than the asset's useful life.