Exam 11: Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition

Foreman Mining purchased land containing a copper deposit for $2,300,000 on January 7, 2018. The company expects to mine 600,000 tons of copper over the next 10 years, and the land is expected to have a residual value of $1,400,000. The company has also purchased mining equipment for $400,000 that will be used only at this site over the 10 years with an estimated residual value of $52,000. By the end of the first year, the company has mined and sold 50,000 tons of copper. What is the cost attributed to copper inventory for 2018, assuming the company uses the units-of-production method?

Equipment was acquired on January 1, 2018, for $15,000 with an estimated 4-year life and $1,000 residual value. The company uses straight-line depreciation. Record the gain or loss if the equipment was sold on December 31, 2020, for $5,000.

In its 2018 annual report to shareholders, Buffalo Burgers Company, Inc. included the following in a disclosure note: E. Property, Plant and Equipment Property, plant and equipment for the years ended December 28, 2018, and December 29, 2017, consisted of the following ($ in thousands): The Company recorded depreciation related to these assets of $23,565 thousand in the 2018 fiscal year. Also, Buffalo Burgers reported the following information in the annual report ($ in thousands): -Use a T-account to show the balances and changes during 2018 in Buffalo Burgers' Property, Plant and Equipment account and its Accumulated depreciation-Property, Plant & Equipment account.

On September 30, 2018, Bricker Enterprises purchased a machine for $200,000. The estimated service life is 10 years with a $20,000 residual value. Bricker records partial-year depreciation based on the number of months in service. -Depreciation for 2018, using the double-declining balance method, would be:

The allocation base of an asset refers to which of the following?

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Amortization

Archie Co. purchased a framing machine for $45,000 on January 1, 2018. The machine is expected to have a four-year life, with a residual value of $5,000 at the end of four years. -Using the sum-of-the years'-digits method, depreciation for 2019 and book value at December 31, 2019, would be:

On September 30, 2018, Morgan, Inc. acquired all of the outstanding common stock of Pathways, Inc., for $100 million. In addition to tangible assets, Morgan recorded the following assets as a result of the acquisition: Morgan's policy is to amortize intangible assets using the straight-line method, no residual value, and a six-year useful life. Required: What is the total amount of expenses that would appear in Morgan's income statement for the year ended December 31, 2018, related to these items?

An impairment loss has the effect of:

Property, plant, and equipment and finite-life intangible assets must be tested for impairment at least once a year.

Archie Co. purchased a framing machine for $45,000 on January 1, 2018. The machine is expected to have a four-year life, with a residual value of $5,000 at the end of four years. - Using the double-declining balance method, depreciation for 2018 and book value at December 31, 2018, would be:

An asset acquired January 1, 2018, for $15,000 with an estimated 10-year life and no residual value is being depreciated in an equipment group asset account that has an average service life of eight years. The asset is sold on December 31, 2019, for $6,000. The entry to record the sale would be:

Kingston Corporation has $95 million of goodwill on its books from the 2016 acquisition of Reliant Motors. At the end of its 2018 fiscal year, management has provided the following information for its required goodwill impairment test ($ in millions): Assuming that Reliant is considered a reporting unit for U.S. GAAP and a cash-generating unit for IFRS, the amount of goodwill impairment loss that Kingston should recognize according to U.S. GAAP and IFRS, respectively, is:

On March 31, 2018, M. Belotti purchased the right to remove gravel from an old rock quarry. The gravel is to be sold as roadbed for highway construction. The cost of the quarry rights was $164,000, with estimated salable rock of 20,000 tons. During 2018, Belotti loaded and sold 4,000 tons of rock and estimated that 16,000 tons remained at December 31, 2018. At January 1, 2019, Belotti estimated that 20,000 tons still remained. During 2019, Belotti loaded and sold 8,000 tons. Belotti uses the units-of-production method. - Belotti would record depletion in 2019 of:

In the first year of an asset's life, which of the following methods has the smallest depreciation?

On June 30, 2018, Prego Equipment purchased a precision laser-guided steel punch that has an expected capacity of 300,000 units and no residual value. The cost of the machine was $450,000 and is to be depreciated using the units-of-production method. During the six months of 2018, 24,000 units of product were produced. At the beginning of 2019, engineers estimated that the machine can realistically be used to produce only another 230,000 units. During 2019, 70,000 units were produced. -Prego would report depreciation in 2018 of:

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Impairment

Asset C3PO has a depreciable base of $16.5 million and a service life of 10 years. What would the accumulated depreciation be at the end of year five under the sum-of-the-years' digits method?

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Additions

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Sum-of-the-years'-digits method