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

On October 1, 2018, Holt 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 depreciation expense for 2018 if Holt Company uses the straight-line method of depreciation?

The depreciable cost of a plant asset is its original cost minus obsolescence.

Mehring Company reported net sales of $540,000, net income of $72,000, beginning total assets of $240,000, and ending total assets of $360,000. What was the company's asset turnover?

Which of the following is not an intangible asset arising from a government grant?

The allocation of the cost of an asset to expense over its useful life is called _________________ for tangible plant assets, ________________ for natural resources, and _________________ for intangible assets.

A loss on disposal of a plant asset is reported in the financial statements

A truck that cost $72,000 and on which $60,000 of accumulated depreciation has been recorded was disposed of for $18,000 cash. The entry to record this event would include a

An asset that cannot be sold individually in the market place is

In computing depletion, salvage value is

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

The balances of the major classes of plant assets and accumulated depreciation by major classes should be disclosed in the balance sheet or notes.

Brown Company purchased equipment in 2011 for $150,000 and estimated a $10,000 salvage value at the end of the equipment's 10-year useful life. At December 31, 2017, there was $98,000 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2018, the equipment was sold for $40,000. Prepare the appropriate journal entries to remove the equipment from the books of Brown Company on March 31, 2018. (b) Finney Company sold a machine for $15,000. The machine originally cost $35,000 in 2015 and $8,000 was spent on a major overhaul in 2018 (charged to the Equipment account). Accumulated Depreciation on the machine to the date of disposal was $28,000. Prepare the appropriate journal entry to record the disposition of the machine. (c) Stanley Company sold office equipment that had a book value of $12,000 for $16,000. The office equipment originally cost $40,000 and it is estimated that it would cost $50,000 to replace the office equipment. Prepare the appropriate journal entry to record the disposition of the office equipment.

During 2015, Stein Corporation reported net sales of $5,000,000 and net income of $2,100,000. Stein also reported beginning total assets of $1,000,000 and ending total assets of $1,500,000. Stein's asset turnover is

The book value of a plant asset is obtained by subtracting ______________ from the ______________ of the plant asset.

Grimwood Trucking purchased a tractor trailer for $171,500. Interline uses the units-of-activity method for depreciating its trucks and expects to drive the truck 1,000,000 miles over its 12-year useful life. Salvage value is estimated to be $24,500. If the truck is driven 90,000 miles in its first year, how much depreciation expense should Grimwood record?

On May 1, 2018, Pinkley Company sells office furniture for $300,000 cash. The office furniture originally cost $750,000 when purchased on January 1, 2011. Depreciation is recorded by the straight-line method over 10 years with a salvage value of $75,000. What gain should be recognized on the sale?

Tomko 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. Tomko estimates that the machinery will have a useful life of 10 years and a residual value of $30,000. If Tomko uses straight-line depreciation, annual depreciation will be

Match the items below by entering the appropriate code letter in the space provided. A. Plant assets B. Depreciation C. Book value D. Salvage value E. Straight-line method F. Units-of-activity method G. Double-declining-balance method H. MACRS I. Revenue expenditure J. Capital expenditure 1. Small expenditures which primarily benefit the current period. 2. Cost less accumulated depreciation. 3. An accelerated depreciation method used for financial statement purposes. 4. Tangible resources that are used in operations and are not intended for resale. 5. Equal amount of depreciation each period. 6. Expected cash value of the asset at the end of its useful life. 7. Allocation of the cost of a plant asset to expense over its useful life. 8. Material expenditures which increase an asset's operating efficiency, productive capacity, or useful life. 9. An accelerated depreciation method used for tax purposes. 10. Useful life is expressed in terms of units of production or expected use.

Depreciable cost is the

A loss on disposal of a plant asset can only occur if the cash proceeds received from the asset sale are less than the asset's book value.