Exam 9: Reporting and Analyzing Long-Lived Assets

Interline Trucking purchased a tractor trailer for $84,000. 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 $12,000. If the truck is driven 80,000 miles in its first year, how much depreciation expense should Interline record?

A company purchased factory equipment on June 1, 2014, for $96,000. It is estimated that the equipment will have a $6,000 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, 2014, is

Givens Retail purchased land for a new parking lot for $75,000. The paving cost $105,000 and the lights to illuminate the new parking area cost $36,000. Which of the following statements is true with respect to these additions?

Here are selected 2014 transactions of Howe Corporation. Instructions Journalize all entries required on the above dates, including entries to update depreciation on assets disposed of, where applicable. Howe Corporation uses straight-line depreciation.

The return on assets ratio can be computed from the profit margin ratio and the asset turnover ratio.

Identify the factors that are considered in classifying an expenditure as a capital or a revenue expenditure. Are there instances where it may be difficult to classify an expenditure as one or the other ? What basis would be used in a decision?

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

Foyle Company purchased a new van for floral deliveries on January 1, 2013. The van cost $48,000 with an estimated life of 5 years and $12,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the balance of the Accumulated Depreciation account at the end of 2014?

A machine costing $132,000 was destroyed when it caught fire. At the date of the fire, the accumulated depreciation on the machine was $60,000. An insurance check for $150,000 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

A gain or loss on disposal of a plant asset is determined by comparing the

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

Which of the following would not be included in the Equipment account?

A change in the estimated salvage value of a plant asset requires a restatement of prior years' depreciation.

A company sells a plant asset that originally cost $240,000 for $80,000 on December 31, 2014. The accumulated depreciation account had a balance of $120,000 after the current year's depreciation of $20,000 had been recorded. The company should recognize a

The four subdivisions for plant assets are

Shaffer Company acquires land for $62,000 cash. Additional costs are as follows. Shaffer will record the acquisition cost of the land as

Ryan, Inc. purchased a delivery truck with a $42,000 list price. The company was given a $4,200 cash discount by the dealer, and paid $2,100 sales tax. Annual insurance on the truck is $1,050. As a result of the purchase, by how much will Ryan, Inc. increase its truck account?

Which of the following is not properly classified as property, plant, and equipment?

Nix Corporation sold equipment for $20,000. The equipment had an original cost of $60,000 and accumulated depreciation of $30,000. Ignoriing the tax effect, as a result of the sale

The book value of a plant asset is always equal to its fair market value.