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

A loss on disposal of a plant asset can only occur if the cash proceeds received from the asset sale are less than the asset's book value.

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

A change in the estimated useful life of equipment requires

Yocum Company purchased equipment on January 1 at a list price of $120,000, with credit terms 2/10, n/30. Payment was made within the discount period and Yocum was given a $2,400 cash discount. Yocum paid $6,000 sales tax on the equipment, and paid installation charges of $1,760. Prior to installation, Yocum paid $4,000 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment?

An asset that cannot be sold individually in the market place is

Accountants do not attempt to measure the change in a plant asset's fair value during ownership because

The method most commonly used to compute depletion is the

The cost of land does not include

When purchasing land, the costs for clearing, draining, filling, and grading should be charged to a Land Improvements account.

If a plant asset is retired before it is fully depreciated, and no salvage or scrap value is received,

Farr Company purchased a new van for floral deliveries on January 1, 2015. The van cost $56,000 with an estimated life of 5 years and $14,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the balance of the Accumulated Depreciation account at the end of 2016?

Mattox Company is building a new plant that will take three years to construct. The construction will be financed in part by funds borrowed during the construction period. There are significant architect fees, excavation fees, and building permit fees. Which of the following statements is true?

A gain on sale of a plant asset occurs when the proceeds of the sale are greater than the

Which of the following is not an intangible asset arising from a government grant?

Additions and improvements

The four subdivisions for plant assets are

Natural resources are long-lived productive assets that are extracted in operations and are replaceable only by an act of nature.

The factor that is not relevant in computing depreciation is

Salem Company hired Kirk Construction to construct an office building for £6,400,000 on land costing £1,600,000, which Salem Company owned. The building was complete and ready to be used on January 1, 2015 and it has a useful life of 40 years. The price of the building included land improvements costing £480,000 and personal property costing £600,000. The useful lives of the land improvements and the personal property are 10 years and 5 years, respectively. Salem Company uses component depreciation, and the company uses straight-line depreciation for other similar assets. What is the net amount reported for the building on Salem Company's December 31, 2015 statement of financial position?

A truck was purchased for $180,000 and it was estimated to have a $36,000 salvage value at the end of its useful life. Monthly depreciation expense of $3,000 was recorded using the straight-line method. The annual depreciation rate is