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Exam 18: Property, Plant, and Equipment

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Question 51

True/False

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The acquisition cost of an intangible asset should be charged to expense over the shorter of its legal or useful life.

A) True
B) False

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Question 52

Multiple Choice

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Which of the following is NOT a class under MACRS for personal property?

A) 5 year class
B) 7 year class
C) 10 year class
D) 27.5 year class

E) C) and D)
F) None of the above

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Question 53

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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 $44,000. When it was purchased in July of 2013, it was estimated that it would be driven for 125,000 miles over four years and then sold for an expected salvage value of $4,500. During 2013 the van was driven 17,230 miles. What is the depreciation expense for 2013? (Round final answer to the nearest whole dollar.)

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

MPG Industries purchased a new printing press on January 2, 2013 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?

The acquisition cost of an intangible asset is amortized over the shorter of its legal life or ____________________ life.

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 yearend, June 30.

Using the information shown, calculate the depreciation for 2013, 2014, and 2015 using the Sum-of-the-Years'-Digits Method. (Round to the nearest whole dollar.)

The book value of an asset is

Using the information shown, write the journal entry for the purchase of the Office Furniture assuming it was purchased on credit by signing a note and the journal entry for the Office Equipment purchase assuming that a check was written for it.