Exam 8: Reporting and Analyzing Long-Term Assets

A company purchased a mineral deposit for $800,000.It expects this property to produce 1,200,000 tons of ore and to have a salvage value of $50,000.In the current year,the company mined and sold 90,000 tons of ore.Its depletion expense for the current period is equal to:

Revenue expenditures are additional costs of plant assets that materially increase the assets' life or productive capabilities.

Extraordinary repairs are expenditures extending the asset's useful life beyond its original estimate and are capital expenditures because they benefit future periods.

A company's annual accounting period ends on December 31.During the current year a depreciable asset which cost $24,000 was purchased on October 1.The asset has a $1,000 estimated salvage value.The company uses straight-line depreciation and expects the asset to have a 6-year life.What is the total depreciation expense for the current year?

A copyright gives its owner the exclusive right to publish and sell a musical,literary or artistic work during the life of the creator plus 17 years.

Decision makers and other users of financial statements are especially interested in evaluating a company's ability to use its assets in generating sales.

The units-of-production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

The process of allocating the cost of a natural resource to the period when it is consumed is called _____________________.

Treating capital expenditures of a small dollar amount as revenue expenditures is likely to mislead the users of financial statements.

A machine originally had an estimated useful life of 5 years,but after 3 complete years,it was decided that the original estimate of useful life should have been 10 years.At that point the remaining cost to be depreciated should be allocated over the remaining:

Depreciation is the process of allocating the cost of a plant asset to an expense account in the accounting periods benefiting from its use.

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.