Exam 10: Plant Assets, Natural Resources, and Intangible Assets

Engler Company purchases a new delivery truck for $45,000. The sales taxes are $3,000. The logo of the company is painted on the side of the truck for $1,200. The truck license is $120. The truck undergoes safety testing for $220. What does Engler record as the cost of the new truck?

Management should select the depreciation method that

Conroy Company purchased a machine at a cost of $90,000. The machine is expected to have a $5,000 salvage value at the end of its 5-year useful life. Instructions Compute annual depreciation for the first and second years using the (a) straight-line method. (b) double-declining-balance method.

A plant asset was purchased on January 1 for $40,000 with an estimated salvage value of $8,000 at the end of its useful life. The current year's Depreciation Expense is $4,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $20,000. The remaining useful life of the plant asset is

Depreciable cost is the

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

The book value of a plant asset is the amount originally paid for the asset less anticipated salvage value.

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

A change in the estimated useful life of equipment requires

Presented below is information related to plant assets, natural resources, and intangibles at year end on December 31, 2010, for Rangel Company: Instructions Prepare a partial balance sheet for Rangel Company that shows how the above listed items would be presented.

A company purchased factory equipment on June 1, 2010, for $48,000. It is estimated that the equipment will have a $3,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2010, is

Depletion expense is computed by multiplying the depletion cost per unit by the

Prepare the journal entries to record the following transactions for Eklund Company which has a calendar year end and uses the straight-line method of depreciation. a) On September 30, 2010, the company exchanged old delivery equipment and $24,000 for new delivery equipment. The old delivery equipment was purchased on January 1, 2008, for $84,000 and was estimated to have a $12,000 salvage value at the end of its 5-year life. Depreciation on the delivery equipment has been recorded through December 31, 2009. It is estimated that the fair market value of the old delivery equipment is $36,000 on September 30, 2010. (b) On June 30, 2010, the company exchanged old office equipment and $40,000 for new office equipment. The old office equipment originally cost $80,000 and had accumulated depreciation to the date of disposal of $35,000. It is estimated that the fair market value of the old office equipment on June 30 was $60,000. The transaction has commercial substance.