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Exam 10: Property,plant and Equipment,and Intangibles

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Question 1

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Goodwill is depreciated over its useful life as estimated by the business's management.

A) True
B) False

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Question 2

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______________ is the process of systematically allocating the cost of an intangible asset to expense over its estimated useful life.

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Question 3

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Discuss accounting for an impairment of property,plant and equipment.

A method that allocates an equal portion of the total depreciation for a property,plant and equipment asset to each accounting period during its useful life is called:

Property,plant and equipment include:

Explain how each of the following depreciation methods is calculated: straight-line,units-of-production,and double-declining-balance.

Chervinski Industries recently paid $460,000 to buy a building that has an estimated useful life of 40 years and a residual value of $116,000.Calculate the depreciation expense for the third year after acquisition using double-declining-balance depreciation.Assume a full year of depreciation in the first year.

Discuss the accounting procedures involved for asset disposal through discarding,selling,or exchanging an asset.

The half year rule is the partial-year depreciation method that calculates depreciation by determining if the asset was used for more than half of the month.

Upside Down Company purchased new office equipment for $4,300,by trading in old equipment with a cost of $2,000 and accumulated depreciation to the date of trade of $1,900.Upside Down received a $50 trade-in allowance for the old equipment.This transaction has commercial substance.Prepare the journal entry to record the transaction.

Drilling rights are legal permissions to extract natural resources from the earth and are treated as intangible assets.

SportsWorld purchased property for $100,000.The property included a building,parking lot,and land.The building was appraised at $65,000; the land at $40,000; and the parking lot at $10,000.To the nearest dollar,the value of the land to be recorded in the books should be:

On April 1,2015,Hogan Industries scrapped a machine that cost $10,000 and had accumulated depreciation through December 31,2014,of $10,000.Prepare the journal entry to record the disposal of the machine.

Intangible assets do not include:

Revenue expenditures are additional costs of property,plant and equipment that provide material benefits extending beyond the current period.

A patent:

Depreciation is usually recorded:

The most frequently used method of depreciation is the straight-line method.

Subsequent expenditures are purchases made after the acquisition of equipment to operate,maintain,repair,and improve it.

Hertzog Company purchased and installed a machine on February 1,2014,at a total cost of $72,000.Straight-line depreciation was calculated based on the assumption of a five-year life and no residual value.The machine was disposed of on July 31,2017. Assuming the machine was totally destroyed in a fire and the insurance company settled the claim for $18,000 cash,prepare the general journal entry to record the disposal.