Exam 8: Reporting and Analyzing Long-Term Assets

On January 1,a machine costing $260,000 with a four-year life and an estimated $5,000 salvage value was purchased.It was also estimated that the machine would produce 500,000 units during its life.The actual units produced during its first year of operation were 110,000.Determine the amount of depreciation expense for the first year under each of the following assumptions: a.The company uses the straight-line method of depreciation. b.The company uses the units-of-production method of depreciation. c.The company uses the double-declining-balance method of depreciation.

Plant assets are assets that are held for sale.

A depreciable asset currently has a $24,500 book value.The company owning the asset uses straight-line depreciation.They paid $37,000 for this asset and consider it to have a $2,000 salvage value with a seven-year useful life.How long has the company owned this asset?

Total asset cost plus depreciation expense equals book value.

A company purchased and installed a machine on January 1,2010,at a total cost of $72,000.Straight-line depreciation was calculated based on the assumption of a five-year life and no salvage value.The machine was disposed of on July 1,2013. a.Prepare the general journal entry to update depreciation to July 1,2013. b.Prepare the general journal entry to record the disposal of the machine under each of these three independent situations: (1) The machine was sold for $22,000 cash. (2) The machine was sold for $15,000 cash. (3) The machine was totally destroyed in a fire and the insurance company settled the claim for $18,000 cash.

A change in an accounting estimate is:

On January 1,a company purchased a machine for $75,000 that had a six-year useful life and a salvage value of $6,000.After three years of straight-line depreciation,on January 1,2013,the company paid $7,500 cash to improve the efficiency of the machine.The effect of the expenditure was to increase the productivity of the machine without increasing its remaining useful life or changing its salvage value.Straight-line depreciation is used throughout the machine's life. a.Prepare the journal entry to record the $7,500 expenditure. b.What amount of depreciation expense should be recorded for 2013?

A company purchased equipment valued at $200,000 on January 1.The equipment has an estimated useful life of six years or 5 million units.The equipment is estimated to have a salvage value of $13,400. -Assuming the units of production method of depreciation,what is the annual depreciation for the second year if 1.5 million units were produced?

Smitty Museum purchased the copyright to a piece of artwork for $922,000.Smitty plans to reproduce 1.8 million posters of the artwork over a period of 12 years.Calculate the amortization for the year assuming the Museum plans to reproduce and sell 130,000 posters the first year.

A new machine is expected to produce 600,000 units of product during its eight-year useful life.The machine cost $1,800,000 cash and it is estimated to have a $60,000 salvage value.If depreciation on the machine is calculated by the double-declining-balance method,what is the depreciation for the first year?

An ore deposit costing $800,000 is expected to produce 1,600,000 tons of ore.A total of 70,000 tons are mined and sold in the current year.The depletion expense for the current year is $35,000.

A company used straight-line depreciation for an item of equipment that cost $12,000,had a salvage value of $2,000,and had a five-year useful life.After depreciating the asset for three complete years,the salvage value was reduced to $1,200 and its total useful life was increased from five years to six years.Determine the amount of depreciation to be charged against the machine during each of the remaining years of its useful life:

Plant assets are:

_____________________ is an estimate of an asset's value at the end of its useful life.

A company purchased a delivery van for $23,000 with a salvage value of $3,000 on September 1,2014.It has an estimated useful life of five years.Using the straight-line method,how much depreciation expense should the company recognize on December 31,2014?

Total asset turnover is calculated by dividing:

A company purchased equipment for $5,000 on January 1,2012.The equipment was sold for $1,000 on December 31,2015.Accumulated Depreciation in the amount of $3,000 had been recorded through that date.How would the company record this transaction?

A company had net sales of $789,765 and average assets of $658,137.Calculate the company's total asset turnover.

Terrence Manufacturing pays $5,000 to replace the manual control system on one of its machines with an automated system.The machine is expected to be more productive as a result.How would the company record this transaction?

Mahoney Company had the following transactions involving plant assets during 2012 and 2013.Unless otherwise indicated,all transactions were for cash. Prepare the general journal entries to record these transactions.