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

The cost of a new asset acquired in an exchange that has commercial substance is the cash paid plus the

Sargent Corporation bought equipment on January 1, 2011.The equipment cost €180,000 and had an expected residual value of €30,000.The life of the equipment was estimated to be 6 years.The depreciable cost of the equipment is

Assets that are experiencing rapid price changes must be revalued on an annual basis, otherwise less frequent revaluation is acceptable.

Nicholson Company purchased equipment on January 1, 2010, for €20,000 with an estimated residual value of €5,000 and estimated useful life of 8 years.On January 1, 2012, Nicholson decided the equipment will last 12 years from the date of purchase.The residual value is still estimated at €5,000.Using the straight-line method the new annual depreciation will be:

Residual value is not subtracted from plant asset cost in determining depreciation expense under the declining-balance method of depreciation.

A change in the estimated residual value of a plant asset requires a restatement of prior years' depreciation.

As a recent graduate of State University you're aware that IFRS requires component depreciation for plant assets.A friend has asked you to succinctly explain what component depreciation means.Which of the following correctly describes component depreciation?

Depletion expense is computed by multiplying the depletion cost per unit by the

The cost of natural resources is not allocated to expense because the natural resources are not replaceable.

On July 1, 2011, Jenks Company purchased the copyright to Jackson Computer tutorials for $135,000.It is estimated that the copyright will have a useful life of 5 years with an estimated residual value of $10,000.The amount of Amortization Expense recognized for the year 2011 would be

Yanik Company's delivery truck, which originally cost ₤56,000, was destroyed by fire.At the time of the fire, the balance of the Accumulated Depreciation account amounted to ₤38,000.The company received ₤32,000 reimbursement from its insurance company.The gain or loss as a result of the fire was

Accumulated Depletion

Research and development costs

If a plant asset is retired before it is fully depreciated, and the residual value received is less than the asset's book value,

The cost of land includes all of the following except

Once an asset is fully depreciated, no additional depreciation can be taken even though the asset is still being used by the business.

254 Hadicke Company purchased a delivery truck for $35,000 on January 1, 2011.The truck was assigned an estimated useful life of 100,000 miles and has a residual value of $10,000.The truck was driven 18,000 miles in 2011 and 22,000 miles in 2012.Compute depreciation expense using the units-of-activity method for the years 2011 and 2012.

Salem Company hired Kirk Construction to construct an office building for ₤8,000,000 on land costing ₤2,000,000, which Salem Company owned.The building was complete and ready to be used on January 1, 2011 and it has a useful life of 40 years.The price of the building included land improvements costing ₤600,000 and personal property costing ₤750,000.The useful lives of the land improvements and the personal property are 10 years and 5 years, respectively.Salem Company uses component depreciation, and the company uses straight-line depreciation for other similar assets.What is the net amount reported for the building on Salem Company's December 31, 2011 statement of financial position?

A term that is not synonymous with property, plant, and equipment is