Exam 8: Reporting and Analysing Non-Current Assets

arrow
  • Select Tags
search iconSearch Question
  • Select Tags

A company purchased factory equipment on April 1, 2019, for $48,000. It is estimated that the equipment will have a $6,000 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 31 December, 2019, is:

(Multiple Choice)
4.8/5
(38)

Select of Section of the statement of financial position where the following items are reported. Use the following code to identify your answer: -Trademarks

(Multiple Choice)
4.8/5
(37)

Delta Ltd purchased factory equipment with an invoice price of $50,000. Other costs incurred were freight costs, $1,300; installation wiring and foundation, $2,200; material and labour costs in testing equipment, $700; oil lubricants and supplies to be used with equipment, $500; fire insurance policy covering equipment, $1,400. The equipment is estimated to have a $5,000 residual value at the end of its 8-year useful life. Required: (a) Calculate the acquisition cost of the equipment. Clearly identify each element of cost. (b) If the straight-line method of depreciation was used, the annual rate applied to the depreciable cost would be __________.

(Short Answer)
4.8/5
(33)

Waters Filtration Equipment has obtained the following data from its accounting records: Waters Filtration Equipment has obtained the following data from its accounting records:   The average useful life of PPE assets is: The average useful life of PPE assets is:

(Multiple Choice)
4.7/5
(41)

An IT company has $3,000,000 in research costs. Before accounting for these costs the profit of the company is $2,200,000. What is the amount of profit or loss after these research costs are accounted for?

(Multiple Choice)
4.7/5
(41)

Select of Section of the statement of financial position where the following items are reported. Use the following code to identify your answer: -Licences

(Multiple Choice)
4.8/5
(39)

For the following transaction, (a) determine the amount of the amortisation for the current year, and (b) present the adjusting entries required to record amortisation at year end. (1) Costs of $1,000 were incurred on 1 January to obtain a patent. Shortly thereafter, $29,000 was spent in legal costs to successfully defend the patent against competitors. The patent has an estimated legal life of 12 years.

(Short Answer)
4.8/5
(38)

Indicate whether each of the following expenditures should be classified as: -Electricity used by a machine

(Multiple Choice)
5.0/5
(41)

(a) A company purchased a patent on 1 January, 2019, for $2,500,000. The patent's legal life is 20 years but the company estimates that the patent's useful life will only be 5 years from the date of acquisition. On 30 June, 2019, the company paid legal costs of $162,000 in successfully defending the patent in an infringement suit. Prepare the journal entry to amortise the patent at year end on 31 December, 2019. (b) The Walker Company purchased a franchise from the Tasty Food Company for $400,000 on 1 January, 2019. The franchise is for an indefinite time period and gives the Walker Company the exclusive rights to sell Tasty Wings in a particular territory. Prepare the journal entry to record the acquisition of the franchise and any necessary adjusting entry at year end on 31 December, 2019. The franchise is expected to have value for a period of 20 years. (c) Dawson Company incurred research and development costs of $500,000 in 2019 in developing a new product. Prepare the necessary journal entries during 2019 to record these events and any adjustments at year end on 31 December, 2019.

(Short Answer)
4.7/5
(36)

Indicate whether each of the following expenditures should be classified as: -Cost to install a machine

(Multiple Choice)
4.8/5
(34)

For each item listed, choose a code letter to indicate the allocation terminology for the item. Use the following codes for your answer: -Goodwill

(Multiple Choice)
4.7/5
(29)

Endevour Enterprises acquires land for $250,000 cash. Additional costs are as follows: Endevour Enterprises acquires land for $250,000 cash. Additional costs are as follows:   Endevour Enterprises will record the acquisition cost of the land as: Endevour Enterprises will record the acquisition cost of the land as:

(Multiple Choice)
4.9/5
(34)

A plant asset with a cost of $30,000 and accumulated depreciation of $27,500 is sold for $3,500. What is the amount of the gain or loss on disposal of the plant asset?

(Multiple Choice)
4.8/5
(47)

Indicate whether each of the following expenditures should be classified as: -Cost of tearing down a building when land and a building on it are purchased

(Multiple Choice)
4.8/5
(35)

Identify the following expenditures : -Painting and lettering of a used truck upon acquisition of the truck.

(Multiple Choice)
4.8/5
(33)

On 1 January, 2019, Rata Ltd purchased and installed a telephone system at a cost of $20,000. The equipment was expected to last five years with a salvage value of $3,000. On 1 January, 2020, more telephone equipment was purchased to tie-in with the current system for $8,000. The new equipment is expected to have a useful life of four years. Through an error, the new equipment was debited to Telephone expense. Rata Ltd uses the straight-line method of depreciation. Prepare a schedule showing the effects of the error on Telephone expense, depreciation expense, and Net profit for each year and in total beginning in 2019 through the useful life of the new equipment. On 1 January, 2019, Rata Ltd purchased and installed a telephone system at a cost of $20,000. The equipment was expected to last five years with a salvage value of $3,000. On 1 January, 2020, more telephone equipment was purchased to tie-in with the current system for $8,000. The new equipment is expected to have a useful life of four years. Through an error, the new equipment was debited to Telephone expense. Rata Ltd uses the straight-line method of depreciation. Prepare a schedule showing the effects of the error on Telephone expense, depreciation expense, and Net profit for each year and in total beginning in 2019 through the useful life of the new equipment.

(Short Answer)
4.8/5
(39)

Winningham Ltd sold the following two machines in 2019: Winningham Ltd sold the following two machines in 2019:    Journalise all entries required to update depreciation and record the sales of the two assets in 2019. The company has recorded depreciation on the machine through 31 December, 2018. Journalise all entries required to update depreciation and record the sales of the two assets in 2019. The company has recorded depreciation on the machine through 31 December, 2018.

(Short Answer)
5.0/5
(32)

Select of Section of the statement of financial position where the following items are reported. Use the following code to identify your answer: -Equipment

(Multiple Choice)
4.9/5
(32)

Natural resources are regarded as a special type of asset because they:

(Multiple Choice)
4.9/5
(32)

A plant asset acquired on October 1, 2019, at a cost of $400,000 has an estimated useful life of 10 years. The residual value is estimated to be $30,000 at the end of the asset's useful life. Determine the depreciation expense for the first two years using the: (a) straight-line method (b) diminishing balance method (where the constant rate is 23%).

(Short Answer)
4.9/5
(36)
Showing 21 - 40 of 131
close modal

Filters

  • Essay(0)
  • Multiple Choice(0)
  • Short Answer(0)
  • True False(0)
  • Matching(0)