FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 18: Property, Plant, and Equipment

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

True/False

Review LaterAdd Note

Review Later

Under GAAP and the conservatism principle, losses on trade-ins are recognized and recorded but gains on trade-ins are not allowed.

A) True
B) False

Correct Answer

verified

Show Answer

Question 62

Multiple Choice

Review LaterAdd Note

Review Later

A company purchased equipment on account for $25,000. They paid within the discount period and saved 1% of the purchase cost. 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:

A) $25,250.
B) $26,750.
C) $27,000.
D) $27,300.

E) All of the above
F) A) and B)

Correct Answer

verified

Show Answer

Question 63

Essay

Review LaterAdd Note

A. Using the information shown, record the journal entry for the sale of the facility for $26,450. Assume that the sale took place on July 1, 2019, six months after the facility was written down. A. Record the journal entry made to update the books prior to the sale. B. In addition, assume that the new technology that made the Mixer owned by the company has been determined to environmental unsound and has been called off the market. The estimated revenues generated by the Mixer are recalculated to a total of $150,000 over the next four years. Explain what Ryadom Industries must do regarding its asset accounts regarding this turn of events.

When an asset is traded for a similar asset, if the trade-in allowed is less than the book value of the asset, the loss is not recognized for financial accounting purposes.

The Haznot Company acquired a machine for a net cost of $21,600 in September of the current year. It is expected to have no salvage value after 5 years of intensive use. Under the Sum-of-the-Years'-Digits method, the depreciation recorded in year two would be $6,720.

Assume that a business trades in an old cash register for a new one. Under the income tax method:

Amortization is the periodic transfer of an intangible's cost to expense done on a:

The cost of an intangible asset:

The salvage value is the asset's expected value at the end of its useful life.

MPG Industries purchased a new printing press on January 2, 2019 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?

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

At the beginning of the current year, a firm purchased an asset for $60,000 and estimates that it will have a useful life of six years and a salvage value of $6,000. The asset will be depreciated using the straight-line method. The asset was sold for $36.000 at the end of the fourth year of use. What is the amount of gain or loss recognized on the sale?

Using the information shown, calculate the depreciation for 2019, 2020, and 2021 using the Sum-of-the-Years'-Digits Method. (Round to the nearest whole dollar.)

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

C & T Company purchased a company that produced bottled water with fruit juice additives. The brand name for these products, Fruit Options, was well known and had a well-established customer base. At the time of purchase, January 2 of the current year, C & T valued this brand name at $250,000. The life of this intangible asset cannot be determined. However, it was assessed at the end of the year at the purchase price. The patent for the unique processing of the fruit juices had a remaining life of 8 years and an amount of $4,800 was recorded on the books for it. Prepare the journal entries for the amortization of these items at C & T's year end, June 30.

Cullen's Catering owns a delivery van which it depreciates applying the units-of-output method (units-of-production method). The original cost of the van was $58,000. When it was purchased in July of 2019, it was estimated that it would be driven for 125,000 miles over four years and then sold for an expected salvage value of $2,000. During 2019 the van was driven 16,240 miles. What is the depreciation expense for 2019? (Round final answer to the nearest whole dollar.)

At the beginning of the current year, a firm purchased an asset for $60,000 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 book value of the asset after the second year, will be:

Blue Box Company was purchased for $115 million 10 years ago by the Big Box Company. The assessed (market) value of assets at the time of purchase was estimated at $90 million and the additional cash paid over the purchase price was recorded as goodwill. As a result of various product defects over the years, the market value of the Blue Box acquisition dropped to $80 million. Big Box recorded the corresponding impairment loss but instead of spinning off the division, management at Big Box invested heavily this past year in quality improvement programs that resulted in an increase in the market value of the Blue Box acquisition up to $120 million. In the current year, Big Box should:

At the beginning of the current year, a firm purchased an asset for $60,000 and estimates that it will have a useful life of six years and a salvage value of $6,000. The asset will be depreciated using the straight-line method. The asset was sold for $36.000 at the beginning of the fourth year of use. What is the amount of gain or loss recognized on the sale?

Equipment that cost $32,000 was sold for $10,000 cash. Accumulated depreciation on the asset was $24,000. The entry to record the sale includes a credit to the Equipment account for: