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Exam 18: Property, Plant, and Equipment

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Question 51

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If a depreciable asset is sold for an amount that is lower than the asset's book value,a(n)____________________ is recognized.

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Question 52

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The recorded cost of an asset should include both the net invoice price and all transportation and installation costs.

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Question 53

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Real property includes land,land improvements,buildings and other structures attached to the land.

MPG Industries purchased a new printing press on January 2,2016 for a cost of $245,000.Transportation costs to have it delivered were $734.The floor had to have new supports because of the weight of the press.The new supports cost $2,540,which included installation.After the press was in place,two employees took training classes to learn how to use the press at a cost of $1,600.The Equipment account is debited for what amount?

A firm purchases an asset for $50,000 and estimates that it will have a useful life of five years and a salvage value of $5,000.Under the straight-line method,the balance in the accumulated depreciation account,after the second year,will be

The term used to describe the periodic transfer of the acquisition cost to expense when minerals or other natural resources are physically removed during production is ___________________.

When an asset is sold,the first thing an accountant must do is record the depreciation to the date of sale.

A firm purchases an asset for $50,000 and estimates that it will have a useful life of five years and a salvage value of $5,000.Under the double-declining-balance method,the depreciation expense for the second year of the asset's useful life is

Gains and losses on the disposal of long term assets are considered routine operating activities.

On,January 2,2013,Rubble Sand and Gravel Company purchased equipment for $77,000.The equipment was to be used for five years and had a $2,000 estimated residual value. On January 2,2016,equipment was sold for $35,000.Record the transactions on page 9 of a general journal.Omit descriptions.

The balance of an Accumulated Depletion account is subtracted from the related natural resource account to determine the book value of the natural resource.

A business purchased equipment for $52,500 in March of the current year.The machine is expected to provide useful output of 100,000 units over its expected useful life.At the end of its useful life,the machine has an expected residual value of $2,500.Actual output for the current year was 35,000 units.The current year depreciation expense is $17,500.

A company purchased equipment on account for $25,000.By paying within the discount period,they saved 1%.In addition,the company paid $1,500 to have the equipment delivered and $500 to have it installed.In setting up the machine,the maintenance assistant caused $300 in damages which was repaired before the machine was put into service.The cost of this asset for financial accounting purposes is

Percentage depletion for tax purposes provides a business deduction even when the cost basis has been reduced to zero.

In computing the current period expense associated with the depletion of a natural resource,the depletion per unit is calculated and then multiplied by the units extracted.

ASB Ceramics purchased equipment used in the business three years ago for $32,000.The accumulated depreciation account related to the equipment asset account had a balance of $15,000.The equipment had an estimated salvage (residual)value of $2,000 and had an estimated life of six years.A full year's depreciation was taken the first year.ASB uses the straight-line depreciation method.All depreciation is usually recorded at yearend.The company sold the equipment in exchange for a promissory note on July 1 of the current year for $13,000.Record the appropriate entries necessary.

The entry to record the disposal of a worn out machine with cost of $8,000 and accumulated depreciation of $7,200 includes a credit of $800 to the Loss on Disposal account.

In 2016 a mining company paid $150,000 for mining rights.It is estimated that a total of 200,000 tons of ore are available to be extracted.During 2016,18,000 tons of ore were mined.What is the amount of Depletion Expense recorded in the adjusting entry for 2016?

The full disclosure principle requires businesses to show balance information in the depreciable asset accounts,accumulated depreciation amounts and methods used to compute depreciation expense.

Net Book Value is the difference between the net acquisition cost of an asset and its fair market value.