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

Using the units-of-activity method of depreciating factory equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had been used.

Natural resources are

Angie's Blooms purchased a delivery van for $30,000.The company was given a $3,000 cash discount by the dealer, and paid $1,500 sales tax.Annual insurance on the van is $500.As a result of the purchase, by how much will Angie's Blooms increase its van account?

Ordinary repairs should be recognized when incurred as revenue expenditures.

A loss on disposal of a plant asset can only occur if the cash proceeds received from the asset sale is less than the asset's book value.

Henson Company incurred $450,000 of research costs in its laboratory to develop a new product.It spent $60,000 in legal fees for a patent granted on January 2, 2011.On July 31, 2011, Henson paid $45,000 for legal fees in a successful defense of the patent.What is the total amount that should be debited to Patents through July 31, 2011?

251

Moreno Company purchased equipment for $450,000 on January 1, 2010, and will use the double-declining-balance method of depreciation.It is estimated that the equipment will have a 3-year life and a $20,000 residual value at the end of its useful life.The amount of depreciation expense recognized in the year 2012 will be

A truck was purchased for ¥120,000 and it was estimated to have a ¥24,000 residual value at the end of its useful life.Monthly depreciation expense of ¥2,000 was recorded using the straight-line method.The annual depreciation rate is

Ordinary repairs are expenditures to maintain the operating efficiency of a plant asset and are referred to as

On January 1, 2011, Cooper Tree Company (CTC) purchases a copper mine for €10,000,000.The mine is estimated to have 20 million tons of copper and no residual value.CTC estimates that it will take 10 years to extract all the copper contained in the mine.CTC spends an additional €2,000,000 during the early part of 2011 preparing the mine.During 2011, CTC extracts and sells 3 million tons of copper.On CTC's December 31, 2011 statement of financial position, at what net amount is the copper mine reported?

The cost of a purchased building includes all of the following except

Which of the following is not true of ordinary repairs?

Yang Company purchased equipment on January 1 at a list price of ¥500,000, with credit terms 2/10, n/30.Payment was made within the discount period and Yang was given a ¥10,000 cash discount.Yang paid ¥25,000 sales tax on the equipment, and paid installation charges of ¥8,800.Prior to installation, Yang paid ¥20,000 to pour a concrete slab on which to place the equipment.What is the total cost of the new equipment?

Development costs incurred after technological feasibility has been achieved are charged to an expense account.

All of the following factors in computing depreciation are estimates except

The calculation of depreciation using the declining balance method,

The depletion associated with extracting copper from a mine will be reported on the statement of financial position if the company has not yet sold the copper.

Mott Company uses the units-of-activity method in computing depreciation.A new plant asset is purchased for $24,000 that will produce an estimated 100,000 units over its useful life.Estimated residual value at the end of its useful life is $2,000.What is the depreciation cost per unit?

Mattox Company is building a new plant that will take three years to construct.The construction will be financed in part by funds borrowed during the construction period.There are significant architect fees, excavation fees, and building permit fees.Which of the following statements is true?