Exam 8: Operating Assets: Property, Plant, and Equipment, and Intangibles

Select where the following accounts would be reported on Coca­Cola's financial statements. Select all that apply. -Depreciation expense a. Balance Sheet - Property, Plant, and Equipment b. Balance Sheet - Intangible Assets c. Balance Sheet - Current Assets d. Balance Sheet - Other Assets e. Income Statement - Operating Section f. Income Statement - Other Revenue and Expense Section g. Statement of Cash Flows

Depreciation is

Foxrun, Inc. purchased a truck at the beginning of 2015 for $32,500. Foxrun decided to depreciate the truck over an 8-year period using the straight-line method, and estimated its residual value to be $4,500. At the beginning of 2016, Foxrun determined that a 5-year life should have been used to depreciate the truck. The estimated residual value was not affected by the revision in the asset's life. A. Determine the amounts to be recorded as depreciation expense for 2015 and 2016. B. What factors may have influenced Foxrun to change the useful life?

Identify where each of the following accounts would be reported on Coca­Cola's financial statements -Building

Which of the following sets of factors is needed to calculate depreciation on plant and equipment?

Use the following Assets section of Hu Corporation's balance sheets for the years ended December 31, 2015 and 2014 to answer the questions that follow. HU CORPORATION Assets Section of Consolidated Balance Sheets in millions at December 31,2015 2014 ASSETS Current Assets $1,889 and $97 Hu Corporation recorded depreciation expense of $344 million for 2014. -Refer to the information for Hu Corporation. Required: 1 Which items on Hu's balance sheet could be considered intangible assets? Explain the nature of each of these. 2 Explain why it is important that Hu disclose the amounts expended on research and development each year.

Interest is capitalized on all purchased assets.

If technology changes rapidly, a firm should

Exeter Corporation purchased a piece of equipment with a price of $80,000 on March 1, 2015. The amounts below are related to the equipment purchase. Match the items below and explain why each revenue expenditure is not capitalized. -A state agency required that a pollution-control device be installed on the equipment at a cost of $5,000.

At December 31, 2015, Ashland Company has the following amounts on its financial statements:

On December 1, 2014, Xeon Company bought land and an accompanying warehouse from Yen Company for $800,000. The fair market values of the land and the building at the time of purchase were $700,000 and $300,000, respectively. How much of the purchase price should Xeon Company allocate to the land and how much should be allocated to the building?

How does goodwill arise? How is it accounted for and reported on the financial statements?

Interest is never a part of the cost of property, plant, and equipment or intangible assets.

When a company discards machinery that is fully depreciated, this transaction have which of the following effect on the company's accounts?

If a company chooses to treat small plant asset expenditures as expenses, GAAP are being violated.

When land and building are acquired for a lump sum, the purchase amount should be allocated on the basis of the market values of the two assets.

When plant assets are reported, the current period's depreciation expense is subtracted from the original cost on the balance sheet.

Identify where each of the following accounts would be reported on Coca­Cola's financial statements -Accumulated amortization

Acquisition cost should not include expenditures unrelated to the acquisition, like repair costs for damages incurred during installation, or costs incurred after the asset was installed and use begun.

Exeter Corporation purchased a piece of equipment with a price of $80,000 on March 1, 2015. The amounts below are related to the equipment purchase. Match the items below and explain why each revenue expenditure is not capitalized. -The company purchased a three-year liability insurance policy to cover possible damage caused by the new equipment at a cost of $6,000.