Exam 9: Reporting and Analyzing Long-Lived Assets

Equipment with a cost of $640,000 has an estimated salvage value of $40,000 and an estimated life of 4 years or 15,000 hours.It is to be depreciated using the units-of-activity method.What is the amount of depreciation for the first full year, during which the equipment was used for 3,300 hours?

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

Ron's Quik Shop bought equipment for $140,000 on January 1, 2021.Ron estimated the useful life to be 5 years with no salvage value, and the straight-line method of depreciation will be used.On January 1, 2022, Ron decides that the business will use the equipment for a total of 6 years.What is the revised depreciation expense for 2022?

A plant asset with a cost of $600,000 and accumulated depreciation of $570,000 is sold for $70,000.What is the amount of the gain or loss on disposal of the plant asset?

Using the following data for Stevenson Industries, compute the return on assets.

Franchises are classified as plant assets.

A patent

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.

The cost of a patent should be amortized over its legal life or useful life, whichever is shorter.

Equipment costing $60,000 with a salvage value of $12,000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years.Assuming a revised estimated total life of 5 years and no change in the salvage value, the depreciation expense for Year 3 would be

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

Pearson Company bought a machine on January 1, 2022.The machine cost $180,000 and had an expected salvage value of $30,000.The life of the machine was estimated to be 5 years.The book value of the machine at the beginning of the third year would be

An asset that cannot be sold individually in the marketplace is

Equipment with a cost of $640,000 has an estimated salvage value of $60,000 and an estimated life of 4 years or 12,000 hours.It is to be depreciated by the straight-line method.What is the amount of depreciation for the first full year, during which the equipment was used for 3,000 hours?

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

A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership.

A company purchased office equipment for $30,000 and estimated a salvage value of $6,000 at the end of its 8-year useful life.The constant percentage to be applied against book value each year if the double-declining-balance method is used is

A company purchased land for $350,000 cash.The real estate brokers' commission was $25,000 and $35,000 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 is

The book value of an asset will equal its fair value at the date of sale if

Brevard Corporation purchased a taxicab on January 1, 2021 for $34,000 to use for its shuttle business.The cab is expected to have a five-year useful life and no salvage value.During 2022, it retouched the cab's paint at a cost of $1,600, replaced the transmission for $4,000 (which extended its life by an additional 2 years), and tuned-up the engine for $200.If Brevard Corporation uses straight-line depreciation, what amount of annual depreciation will Brevard report for 2022?