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

Use the information presented below for Farley River, Inc. for 2015 and 2014 to answer the questions that follow. Farley River uses the straight-line depreciation method. -Refer to the information for Farley River, Inc. Using the 2015 data, what is the average life of Farley River's property, plant, and equipment rounded to one Decimal place?

What was the book value of the ship for Paulson Transport at the end of the useful life?

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: Calculate the following ratios for Hu for 2015. A. Average life of property, plant, and equipment B. Average age of property, plant, and equipment C. What information do these ratios provide to investors and creditors?

Costs incurred to keep assets in normal operating condition are called revenue expenditures.

Interest included as part of the acquisition cost of the asset is referred to as of interest.

Norwood, Inc. Norwood, Inc. purchased a crane at a cost of $80,000. The crane has an estimated residual value of $5,000 and an estimated life of 8 years, or 12,500 hours of operation. The crane was purchased on January 1, 2015 and was used 2,700 hours in 2015 and 2,600 hours in 2016. -Refer to the information for Norwood, Inc. Based on this information, what method of depreciation will produce the maximum depreciation expense in 2015?

Darrin Brown bought a pub. The purchase price was $695,000. An appraiser provided the following appraisal values: land $320,000: building $370,000 and equipment $60,000. What cost should be allocated to the building?

Relative to plant assets, how can a company report a net loss for a period, and yet still have positive cash flows from operating activities?

Why do many companies use one method to calculate depreciation for the income statement developed for stockholders and another method for income tax purposes?

On the balance sheet, the cumulative amount of plant and equipment already expensed is reported in an account called

A company purchased an asset on January 1, 2014, for $10,000. The asset was expected to have a ten-year life and a $1,000 salvage value. The company uses the straight-line method of depreciation. On January 1, 2016, the company made a major repair to the asset of $5,000, extending its life. The asset is expected to last ten years from January 1, 2016. Calculate the amount of depreciation for 2016.

Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method: -Loss of the sale of equipment

The effect of recording depreciation for the year is an

Select the financial statement on which the user would most likely find the answer to the question given. -What amount of cash was used for to purchase property, plant, and equipment during the year?

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. -During the installation, the equipment was damaged and repair costs of $2,000 were incurred.

is are the expenditures incurred in the discovery of new knowledge and the translation of research into a design or plan for a new product.

How should intangible assets be disclosed on the balance sheet?

Explain how the costs associated with operating assets are reported on the balance sheet.

When Carson Real Estate Company sells equipment for a loss, the Loss on Sale of Asset is treated as accumulated depreciation.

All of the following are intangible assets except