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

Additions and improvements to a plant asset that increase the asset's operating efficiency, productive capacity, or expected useful life are generally expensed in the period incurred.

Which of the following statements is not true when a fully depreciated plant asset is retired?

A computer company has ¥2,000,000 in research costs.Before accounting for these costs, the net income of the company is ¥1,600,000.What is the amount of net income or loss after these research costs are accounted for?

Mather Company purchased equipment on January 1, 2010 at a total invoice cost of $224,000; additional costs of $4,000 for freight and $20,000 for installation were incurred.The equipment has an estimated residual value of $8,000 and an estimated useful life of five years.The amount of accumulated depreciation at December 31, 2011 if the straight-line method of depreciation is used is:

Accumulated depreciation is reported on the statement of financial position as a deduction from plant assets.

Farr Company purchased a new van for floral deliveries on January 1, 2011.The van cost €40,000 with an estimated life of 5 years and €10,000 residual value at the end of its useful life.The double-declining-balance method of depreciation will be used.What is the depreciation expense for 2011?

On January 1, a machine with a useful life of five years and a residual value of $25,000 was purchased for $75,000.What is the depreciation expense for year 2 under the double-declining-balance method of depreciation?

257 Miley Enterprises sold equipment on January 1, 2011 for ₤5,000.The equipment had cost ₤24,000.The balance in Accumulated Depreciation at January 1 is ₤20,000.What entry would Robot make to record the sale of the equipment?

A patent should

Carey Company buys land for €50,000 on 12/31/10.As of 3/31/11, the land has appreciated in value to €50,700.On 12/31/11, the land has an appraised value of €51,800.By what amount should the Land account be increased in 2011?

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

When purchasing delivery equipment, sales taxes and motor vehicle licenses should be charged to Delivery Equipment.

If a mining company extracts 2,000,000 tons in a period but only sells 1,600,000 tons,

A coal company invests €16 million in a mine estimated to have 20 million tons of coal and no residual value.It is expected that the mine will be in operation for 5 years.In the first year, 1,000,000 tons of coal are extracted and sold.What is the depletion expense for the first year?

The book value of a plant asset is the difference between the

On May 1, 2011, Pinkley Company sells office furniture for €90,000 cash.The office furniture originally cost €225,000 when purchased on January 1, 2003.Depreciation is recorded by the straight-line method over 10 years with a residual value of €22,500.What depreciation expense should be recorded on this asset in 2011?

A company purchased factory equipment on April 1, 2011 for €80,000.It is estimated that the equipment will have a €10,000 residual 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, 2011 is

On a statement of financial position, natural resources may be described more specifically as all of the following except

Hull Company acquires land for $96,000 cash.Additional costs are as follows: Hull will record the acquisition cost of the land as

Goodwill