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

Greer Company purchased land for $256,000.Additional costs include a $15,300 fee to a broker,a survey fee of $2,400,$1,750 to construct a fence and a legal fee of $8,500.What is the cost of the land?

What impact does materiality have on the determination of how a cost related to a plant asset is reported on the financial statements?

Depreciation does not describe the increase or decrease in the market value of the asset.

Blanton Company bought equipment with a cost of $160,000,an estimated residual value of $40,000,and an estimated life of 15 years was depreciated by the straight-line method for 4 years.Due to obsolescence,it was determined at the beginning of 2014 that the useful life should be shortened by 3 years and the residual value changed to zero.The depreciation expense for 2014 is

Many companies use MACRS (Modified Accelerated Cost Recovery System)depreciation for

Gommert Co.purchased land and a building for $425,000.The appraised values of the land and the building were $150,000 and $450,000,respectively.In addition,the attorney was paid $10,000 for handling the closing on the property.

Flexibility in valuation of property,plant,and equipment under IFRS may cause problems with comparability of one company with another.

Which of the following below is an example of a capital expenditure?

On January 1,2014,Aaron Simpson bought a farm store of a small competitor for $620,000.An appraiser,hired to assess the acquired assets' value,determined that the land,building,and equipment had market values of $300,000,$215,000,and $270,000,respectively. REQUIRED: 1.What is the acquisition cost of each asset? Prepare a journal entry to record the acquisition. 2.Simpson plans to depreciate the building on a straight-line basis for 30 years and the equipment over 16 years .Determine the amount of depreciation expense for 2014 on these newly acquired assets.You can assume zero residual value for all assets. 3.How would the assets appear on the balance sheet as of December 31,2014?

Which of the following accounts would not be reported in the Property,Plant,and Equipment section of a balance sheet?

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

Asset turnover is calculated as Net income divided by Average Total Assets.

All of the following statements are true except:

A gain is recognized on the disposal of plant assets when:

Arena,Inc.uses straight-line depreciation for its equipment.Arena purchased equipment for $300,000 and estimated its useful life at 8 years.The bookkeeper failed to consider the residual value of $50,000.What is the impact on earnings per share and operating income of failing to consider the residual value?

Why is depreciation added to net income in the Operating Activities category of the statement of cash flows when the indirect method is used?

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 about Grover,Inc. If Grover uses the straight-line method,what is the book value at December 31,2015?

For each of the following sentences 11-14,select the word or group of words that best completes the statement. ______________________________ is an account that can only exist if one company purchases another business and the cost exceeds the fair market values of the identifiable net assets at the time acquired.

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 about Grover,Inc. What amount will Grover,Inc.report as depreciation expense over the 8-year life of the equipment?

Yellow Dog Transit sold an old truck on December 31,2013,for $18,400 cash.The following data was available when the truck sold: When this transaction is recorded,it should include a(n)