Exam 7: Reporting and Analyzing Liabilities and Stockholders Equity

Nix Corporation sold equipment for $40000.The equipment had an original cost of $120000 and accumulated depreciation of $60000.Ignoring the tax effect as a result of the sale

On December 1 2022 Daylilly Company purchased a patent from Elvis Company for $1200000 plus legal fees of $24000.The patent was recorded on Elvis' books for $60000.It is estimated that the patent has a remaining useful life of 6 years.Use the following tabular analysis to make the adjustment for amortization expense for the year 2022.

Pearson Company bought a machine on January 1 2022.The machine cost $180000 and had an expected salvage value of $30000.The life of the machine was estimated to be 5 years.The depreciable cost of the machine is

Jamison Inc.is a regional air cargo carrier.Jamison made a $4500 improvement to one of its airplanes.If Jamison's accountant expensed this amount which of the following statements is true?

The term applied to the periodic expiration of a plant asset's cost is

A patent

A loss on disposal of a plant asset is reported in the financial statements

If a plant asset is sold at a gain the gain on disposal should reduce the cost of goods sold section of the income statement.

The cost of ordinary repairs should be recognized when incurred as revenue expenditures.

The following information is provided for Nguyen Company and Northwest Corporation. (in \ millions) Nquyen Company Northwest Corporation Net income 2022 \ 165 \ 420 Net sales 2022 1,650 4,900 Total assets 12/31/20 1,000 2,400 Total assets 12/31/21 1,050 3,000 Total assets 12/31/22 1,150 4,000 If Nguyen and Northwest are in the same industry and the industry average for return on assets is equal to 30% which of the following statements is true?

On July 1 2021 Fleming Company sells machinery for $240000.The machinery originally cost $600000 had an estimated 5-year life and an expected salvage value of $100000.The Accumulated Depreciation account had a balance of $350000 on January 1 2022 using the straight-line method.The gain or loss on disposal is

Companies only dispose of plant assets by either sale or exchange.

A permanent decline in the market value of an asset is referred to as an impairment.

The cost of a long-term asset is expensed

Using the following data for Stevenson Industries compute the return on assets. Net Income \ 180,000 Total Assets 12/31/22 2,410,000 Total Assets 12/31/21 1,980,000 Net Sales 250,000

A patent should

Ordinary repairs are costs incurred to increase the operating efficiency or expected useful life of the plant asset.

The cost of land does not include

In recording the acquisition cost of an entire business

Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets?