Exam 7: Operating Assets

On January 1, 2013, a company sold a machine for $5,000 that it had used for several years. The machine cost $11,000, and had accumulated depreciation of $4,500 at the time of sale. What gain or loss will be reported on the income statement for the sale of the machine?

Select the account to which each of the following costs would be debited. (Choices may be used more than once.) a.Land b.Land Improvements c.Buildings d.Machinery and Equipment e.An Expense Account -The annual painting costs of an office building.

Floors 4 U uses straight-line depreciation for its equipment. The company purchased equipment for $250,000 and estimated its useful life at 8 years. The bookkeeper failed to consider the residual value of $25,000. What is the impact on earnings per share and operating income of failing to consider the residual value?

Match these terms with their correct definition. a.Book value e.Depreciation b.Cost f.Impairment c.Depletion g.Involuntary disposal d.Depreciable cost h.Residual value -Cost less accumulated depreciation

Which of the following costs related to the purchase of production equipment would be considered a revenue expenditure?

Refer to Fernbank Farms. When calculating depreciation for 2013, the company's accountant should

On January 1, 2013, a machine with an estimated life of 5 years and an estimated residual value of $5,000 was acquired for $40,000. On July 1, 2015, the machine was sold for $7,000 cash. The journal entry to record the sale

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.) a.Balance Sheet--Property, Plant, and Equipment b.Balance Sheet--Intangible Assets c.Balance Sheet--Current Assets d.Balance Sheet--Other Assets e.Income Statement--Operating Section f.Income Statement--Other Revenue and Expense Section -Goodwill

Which of the following sets of factors is needed to calculate depreciation on plant and equipment?

A research consortium has a large portion of its plant assets concentrated in an area where technology is rapidly changing. The organization wants to minimize taxable income and maximize net income reported to shareholders. Recommend a course of action for accomplishing this objective and provide support for your recommendation.

Which of the following factors is not related to the decline in the usefulness of plant and equipment assets, and therefore does not need to be considered in selecting an appropriate depreciation method?

Refer to Fabian Woodworks. If the company uses the double-declining-balance depreciation method, what amount is the depreciation expense for 2013?

Capitalizing an expenditure rather than recording it as a revenue expenditure

-Refer to Fabulous Creations. The company recorded depreciation expense of $344 million for 2012. Calculate the following ratios for 2013.

What is the relationship between the book value of a plant asset, the market value of the plant asset, and the salvage value of a plant asset? Explain.

How are research and development costs reported in the financial statements? Why is this treatment required?

All intangible assets are subject to amortization.

If new equipment purchased in 2013 is reported on the balance sheet at December 31, 2013 as a long-term asset, there will be no related item on the 2013 income statement.

Match these terms with their correct definition. a.Book value e.Depreciation b.Cost f.Impairment c.Depletion g.Involuntary disposal d.Depreciable cost h.Residual value -A permanent decline in the future benefit or service potential of an asset

Using different depreciation methods for book purposes versus tax purposes for the same asset is