Exam 8: Receivables, Bad Debt Expense, and Interest Revenue

Nadler Inc. purchased equipment for $48,000, and estimated that the equipment will have a $4,000 residual value at the end of its 8-year useful life. Using the double-declining-balance method, the depreciation expense for the third year would be

What is the book value of a tangible operating asset?

A machine, acquired for a cash cost of $6,000, is being depreciated on a straight-line basis of $900 per year. The residual value was estimated to be 10% of cost. What is the estimated useful life?

Rebuild Inc. purchased a plant and the land on which the plant was located for a total of $300,000 cash. The separate market values of the plant and land were not known, so Rebuild hired an independent appraiser who gave the following estimated market values: plant, $220,000; land, $110,000. Complete the entry to record the acquisition (show computation).

Which of the following is not a tangible capital asset?

Trumble Company purchased a machine on January 1, 20X2, for $10,000. The company bookkeeper incorrectly used a six-year life instead of a five-year life to depreciate the machine. What would be the effect of this error on the 20X2 financial statements?

Under IFRS, a corporation may capitalize interest for:

On January 1, 20X3, a machine with a useful life of five years and a residual value of $2,500 was purchased for $25,000. Using the double-declining-balance method, the depreciation expense for the year ending December 31, 20X4 would be

One of the most important challenges facing managers is forecasting the level of productive capacity (fixed assets) needed in the long run to meet customer demand.

Which of the following would not be included in the acquisition cost of a building?

A company purchases a remote site building for computer operations. The building will be suitable for operations after some expenditures. The wiring must be replaced to computer specifications. The roof is leaky and must be replaced. All rooms must be repainted and re-carpeted and there will also be some plumbing work done. Which of the following statements is true?

The Orser Mining Company acquired a gold mine for $8,000,000. It is estimated that 40,000 ounces of gold can be extracted from the mine. In the first year of operations, 15,000 ounces of gold were extracted. The Orser Mining Company would recognize:

In 20X3, WD Company reported the cost of its theme parks, resorts, and other assets at $14,037 million and the accumulated depreciation at $5,382 million. In that same year, "Toys 4 U" reported $5,610 million in operating assets and accumulated depreciation on them of $1,398 million. 1. Estimate the approximate remaining life of the assets for WD Company and "Toys 4 U". 2. Which company appears to have newer assets with longer remaining lives?

All research costs should be capitalized when incurred.

Eastern Fisheries Co. purchased equipment on January 1, 20X1 for $22,500. The equipment had an estimated useful life of 10 years and an estimated residual value of $2,500. The company uses double-declining-balance depreciation. -Assuming Eastern uses double- declining-balance depreciation, what would be the book value of the machine on December 31 20X2?

Which of the following statements is false?

Depletion is recorded for which of the following?

Intangible assets

Hershon Inc. acquires a new machine. It is comprised of 2 different identifiable components the P922 and the B14. Each of these components is expected to be overhauled at different intervals. The acquisition cost of the entire machine is as follows: Component P922: \ 198,000 Component R14: \ 240,000 Total \ 438,000 Component P922 is expected to have a useful life of five years and a residual value of $\$ 20,000$ before the first major overhaul is required. Component R14 is expected to have a useful life of seven years and a residual value of $\$ 15,000$ before its first overhaul. -Assuming straight-line depreciation, what will be the net book value of component P922 at the end of year five?