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

Intangible assets are the rights and privileges that result from ownership of long-lived assets that

The depreciable cost of a plant asset is its original cost minus obsolescence.

Research and development costs can be classified as a property, plant, and equipment item or as an intangible asset.

Equipment that cost $420,000 and on which $200,000 of accumulated depreciation has been recorded was disposed of for $180,000 cash. The entry to record this event would include a

Depreciable cost is the

Capital expenditures are expenditures that increase the company's investment in productive facilities.

Each of the following is used in computing revised annual depreciation for a change in estimate except

A company exchanges its old office equipment and $80,000 for new office equipment. The old office equipment has a book value of $56,000 and a fair value of $40,000 on the date of the exchange. The cost of the new office equipment would be recorded at

During 2015, Rathke Corporation reported net sales of $3,000,000, net income of $1,200,000, and depreciation expense of $100,000. Rathke 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. Rathke's asset turnover is

A coal company invests $15 million in a mine estimated to have 20 million tons of coal and no salvage value. It is expected that the mine will be in operation for 5 years. In the first year, 1,000,000 tons of coal are extracted and sold. What is the depletion expense for the first year?

Rooney Company incurred $560,000 of research and development cost in its laboratory to develop a patent granted on January 1, 2015. On July 31, 2015, Rooney paid $84,000 for legal fees in a successful defense of the patent. The total amount debited to Patents through July 31, 2015, should be:

Depletion cost per unit is computed by dividing the total cost of a natural resource by the estimated number of units in the resource.

Equipment was purchased for $300,000. Freight charges amounted to $14,000 and there was a cost of $40,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $60,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be

Equipment was purchased for $85,000 on January 1, 2015. 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, 2016, if the straight-line method of depreciation is used?

Companies record a gain or loss on the exchange of plant assets because most exchanges have commercial substance.

Sargent Corporation bought equipment on January 1, 2015. The equipment cost $360,000 and had an expected salvage value of $60,000. The life of the equipment was estimated to be 6 years. The depreciation expense using the straight-line method of depreciation is

Using the units-of-activity method of depreciating factory equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had been used.

A plant asset was purchased on January 1 for $60,000 with an estimated salvage value of $12,000 at the end of its useful life. The current year's Depreciation Expense is $6,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $30,000. The remaining useful life of the plant asset is

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

Which depreciation method is most frequently used in businesses today?