Exam 8: Operating Assets: Property, plant, and Equipment, and Intangibles

For each of the following sentences 11-14,select the word or group of words that best completes the statement. ______________________________ is(are)a cost(s)that improves an operating asset and is (are)added to the asset account.

Wen's Export Co. Wen's Export Co.purchased a new delivery truck at the beginning of 2013.The truck has a cost of $37,000,an estimated life of 5 years,and an estimated residual value of $7,000.A full year's depreciation expense is to be recorded in 2013.The truck was driven 20,000 miles during 2013 and 24,000 miles during 2014.The number of expected miles over five years is 100,000. Refer to information for Wen's Export Co. What is the amount by which double-declining-balance depreciation exceeds straight-line depreciation over the 5-year life of the truck?

International accounting standards require companies to revalue their property,plant,and equipment to reflect fair market values.

A change in estimate should be recorded_________________.

Francis Real Estate purchased a building for $600,000 in 2001.At the end of 2013,when it had a book value of $450,000,it was appraised for $1,000,000.A potential buyer offered $900,000.Francis rejected the offer.What amount should is recorded on Francis' records at the end of 2013 in the account called Buildings?

Yu Corporation Use the following Assets section of Yu Corporation's balance sheets for the years ended December 31,2013 and 2012 to answer the questions that follow. Yu Corporation recorded depreciation expense of $344 million for 2012. Refer to the information for Yu Corporation. Required: (1)Determine the book value of Yu's property,plant and equipment at December 31,2013 and 2012. (2)What types of transaction(s)could have caused the change in book value of property,plant,and equipment during 2013?

Acquisition costs are also known as replacement costs.

At the end of 2013,Mirror Productions determined that one of its copyrights was worthless.The copyright had a cost of $320,000.The copyright had been amortized for 8 years of its estimated 25-year legal life.Which of the following statements is the justification for removing the remaining cost of the copyright from the accounting records?

Canal Industries has an intangible asset is being amortized over a ten-year time period.However,a competitor has just introduced a new product that will have a serious negative impact on the asset's value.Should the company continue to amortize the intangible asset over the ten-year life? Explain.

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.

Duggard Transport Company On January 1,2013,Duggard Transport Company purchased a ship for $2,000,000.It has a ten-year useful life and a residual value of $50,000.The company uses the double-declining-balance method. What was the depreciation expense for Duggard Transport for the year ended December 31,2014?

Stately Co.began construction of a new factory at the beginning of 2013.At the end of the year,construction was completed,and construction costs totaled $200,000.Stately borrowed $180,000 at the beginning of 2013 to finance the construction and repaid the loan at the end of 2013.The interest rate on the loan was 9%.Determine the following amounts.

Relative to plant assets,how can a company report a net loss for a period,and yet still have positive cash flows from operating activities?

Why do many companies use MACRS (Modified Accelerated Cost Recovery System)depreciation for tax purposes? If a company uses MACRS for depreciation for tax purposes,can it use a different method for financial reporting? Explain why or why not.

Grover,Inc. Grover,Inc.purchased a crane at a cost of $80,000.The crane has an estimated residual value of $5,000 and an estimated life of 8 years,or 12,500 hours of operation.The crane was purchased on January 1,2013 and was used 2,700 hours in 2013 and 2,600 hours in 2014. Refer to the information for Grover,Inc. Based on this information,what method of depreciation will produce the maximum depreciation expense in 2013?

Miguel Foods,Inc.purchased a patent at the beginning of 2013 for $350,000.Economic benefits were expected for 7 years,but the patent's legal life was 20 years.Also during 2013,the company incurred research and development costs of $270,000.Patent amortization expense for 2013 is

GAAP require that research and development costs to develop a new product be

When a company discards machinery that is fully depreciated,this transaction would be recorded with the following entry

On January 2,2013,Hannah Company sold a machine for $1,000 that it had used for several years.The machine cost $12,000,and had accumulated depreciation of $9,000 at the time of sale.What gain or loss will be reported on the income statement for the sale of the machine?

Newco Publishing Company purchased equipment at the beginning of 2014 for $200,000.The company decided to depreciate the equipment over an 8-year period using the straight-line method.The company estimated the equipment's residual value at $20,000.The journal entry to record depreciation expense for 2014 will