Exam 9: Reporting and Analyzing Long-Lived Assets

Hopson Company incurred $900,000 of research and development costs in its laboratory to develop a new product.It spent $120,000 in legal fees for a patent granted on January 2, 2022.On July 31, 2022, Hopson paid $90,000 for legal fees in a successful defense of the patent.What is the total amount that should be debited to Patents through July 31, 2022?

All of the following are factors that a company should consider before a write-down impairment of an asset is recorded except

A machine costing $176,000 was destroyed when it caught fire.At the date of the fire, the accumulated depreciation on the machine was $80,000.An insurance check for $200,000 was received based on the replacement cost of the machine.The entry to record the insurance proceeds and the disposition of the machine will include a

Additions and improvements to a plant asset that increase the asset's operating efficiency, productive capacity, or expected useful life are generally expensed in the period incurred.

Land improvements should be depreciated over the useful life of the

A company has the following assets: Buildings and Equipment, The total amount reported under Property, Plant, and Equipment would be

A plant asset cost $192,000 and is estimated to have a $24,000 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

Shaffer Company acquires land for $77,000 cash.Additional costs are as follows. Shaffer will record the acquisition cost of the land as

Arnold Company purchases a new delivery truck for $45,000.The sales taxes are $2,500.The logo of the company is painted on the side of the truck for $1,200.The truck's annual license is $120.The truck undergoes safety testing for $220.What does Arnold record as the cost of the new truck?

Mitchell Corporation bought equipment on January 1, 2022.The equipment cost $300,000 and had an expected salvage value of $50,000.The life of the equipment was estimated to be 6 years.The book value of the equipment at the beginning of the third year would be

Conley Company purchased equipment for $120,000 on January 1, 2020 and will use the double-declining-balance method of depreciation.It is estimated that the equipment will have a 5-year life and a $6,000 salvage value at the end of its useful life.The amount of depreciation expense recognized in the year 2022 will be

Which depreciation method is most frequently used in businesses today?

Mitchell Corporation bought equipment on January 1, 2022.The equipment cost $300,000 and had an expected salvage value of $50,000.The life of the equipment was estimated to be 6 years.The depreciation expense using the straight-line method of depreciation is

On October 1, 2022, Hess Company places a new asset into service.The cost of the asset is $120,000 with an estimated 5-year life and $30,000 salvage value at the end of its useful life.What is the book value of the plant asset on the December 31, 2022 balance sheet assuming that Hess Company uses the double-declining-balance method of depreciation?

Which of the following methods will result in the highest depreciation in the first year?

Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets?

The book value of a long-term asset is calculated by subtracting its salvage value from its cost.

A company purchased land for $94,000 cash.The 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.Proceeds from salvage of the demolished building were $1,200.Under the historical cost principle, the cost of land is

Which of the following is not an advantage of leasing a long-term asset?

Stine Company purchased machinery with a list price of $96,000.They were given a 10% discount by the manufacturer.They paid $600 for shipping and sales tax of $4,500.Stine estimates that the machinery will have a useful life of 10 years and a residual value of $30,000.If Stine uses straight-line depreciation, annual depreciation will be