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

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 recarpeted and there will also be some plumbing work done.Which of the following statements is true?

In an exchange of plant assets that has commercial substance

Depletion cost per unit is computed by dividing the total cost of a natural resource by the estimated number of units in the resource.

Identify the item below where the terms are not related.

All plant assets (fixed assets) must be depreciated for accounting purposes.

A company decides to exchange its old machine and ¥770,000 cash for a new machine.The old machine has a book value of ¥630,000 and a fair value of ¥700,000 on the date of the exchange.The cost of the new machine would be recorded at

U.S.GAAP requires companies to expense all research and development costs as incurred.

Which of the following statements concerning IFRS and U.S.GAAP is true?

The method most commonly used to compute depletion is the

The entry to record depletion expense

256 On January 1, 2009, Reyes Company purchased a computer system for $25,500.The system had an estimated useful life of 5 years and no residual value.At January 1, 2011, the company revised the remaining useful life to two years.What amount of depreciation will recorded for 2011 and 2012?

A factory machine was purchased for $90,000 on January 1, 2011.It was estimated that it would have a $18,000 residual value at the end of its 5-year useful life.It was also estimated that the machine would be run 40,000 hours in the 5 years.The company ran the machine for 4,000 actual hours in 2011.If the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2011 would be

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

On July 1, 2011, Hale Kennels sells equipment for $66,000.The equipment originally cost $180,000, had an estimated 5-year life and an expected residual value of $30,000.The accumulated depreciation account had a balance of $105,000 on January 1, 2011, using the straight-line method.The gain or loss on disposal is

A company purchased factory equipment on June 1, 2011, for ¥800,000.It is estimated that the equipment will have a ¥50,000 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

Goodwill can be recorded

IFRS allows companies to revalue plant assets to fair value.When an asset has increased in value, where is the account "Revaluation Surplus" reported?

A loss on the exchange of plant assets occurs when the fair value of the old asset is less than its book value.

A patent

If a plant asset is sold before it is fully depreciated,