Exam 9: Reporting and Analyzing Long-Lived Assets

Equipment costing $105,000 with a salvage value of $21,000 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 6 years and no change in the salvage value, the depreciation expense for Year 3 would be

In computing depreciation, salvage value is

Schrock Company purchases a new delivery van for $70,000.The sales taxes are $5,250.The logo of the company is painted on the side of the van for $1,400.The van's annual license is $140.The van undergoes safety testing for $250.What does Schrock record as the cost of the new van?

On January 1, a machine with a useful life of five years and a residual value of $80,000 was purchased for $240,000.What is the depreciation expense for year 2 under the double-declining-balance method of depreciation?

The four subdivisions of plant assets are

The asset turnover is calculated as net sales divided by ending total assets.

On November 1, 2021, Lovett Company places a new asset into service.The cost of the asset is $90,000 with an estimated 5-year life and $10,000 salvage value at the end of its useful life.What is the depreciation expense for 2022 if Lovett Company uses the straight-line method of depreciation?

The term applied to the periodic expiration of a plant asset's cost is

Under the double-declining-balance method, the depreciation rate used each year remains constant.

In 2022, Blanchard Corporation has plant equipment that originally cost $120,000 and has accumulated depreciation of $48,000.A new processing technique has rendered the equipment obsolete, so it is retired.Which of the following entries should Blanchard use to record the retirement of the equipment?

In the notes to the financial statements, the depreciation and amortization methods used should be described.

A loss on disposal of a plant asset as a result of a sale or a retirement is calculated in the same way as a gain on disposal.

Depreciation is a process of

An asset was purchased for $140,000.It had an estimated salvage value of $35,000 and an estimated useful life of 10 years.After 5 years of use, the estimated salvage value is revised to $28,000 but the estimated useful life is unchanged.Assuming straight-line depreciation, depreciation expense in Year 6 would be

The following information is provided for Nguyen Company and Northwest Corporation. If Nguyen and Northwest are in the same industry and the industry average for return on assets is equal to 30%, which of the following statements is true?

Recording depreciation each period is necessary in accordance with the

A company purchased factory equipment on June 1, 2022 for $128,000.It is estimated that the equipment will have an $8,000 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, 2022 is

Equipment that cost $144,000 and on which $120,000 of accumulated depreciation has been recorded was disposed of for $36,000 cash.The entry to record this event would include a

The cost of land does not include

Recording depreciation in each period is an application of the matching principle.