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

The units-of-activity method is generally not suitable for

All plant assets (fixed assets) must be depreciated for accounting purposes.

Depletion 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.

When plant assets are exchanged, the cost of the new asset is the book value of the old asset plus any cash paid.

A purchased patent has a legal life of 20 years. It should be

A company purchased land for $90,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be recorded at

Research and development costs should be charged to expense when incurred.

The cost of a patent must be amortized over a 20-year period.

IFRS allows companies to revalue plant assets to fair value. When an asset has increased in value, where is the account "Revaluation Surplus" reported?

A company purchased office equipment for $40,000 and estimated a salvage value of $8,000 at the end of its 5-year useful life. The constant percentage to be applied against book value each year if the double-declining-balance method is used is

The method most commonly used to compute depletion is the

Recording depreciation each period is necessary in accordance with the

Research and development costs which result in a successful product which is patentable are charged to the Patent account.

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

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

In an exchange of plant assets that has commercial substance, any difference between the fair value and the book value of the old plant asset is

The book value of an asset is equal to the

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

Henson Company incurred $600,000 of research and development costs in its laboratory to develop a new product. It spent $90,000 in legal fees for a patent granted on January 2, 2015. On July 31, 2015, Henson paid $60,000 for legal fees in a successful defense of the patent. What is the total amount that should be debited to Patents through July 31, 2015?