FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 8: Reporting and Analyzing Long-Term Assets

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 111

Essay

Review LaterAdd Note

Review Later

On April 1 of the current year, a company purchased and placed in service a machine with a cost of $240,000. The company estimated the machine's useful life to be four years or 60,000 units of output with an estimated salvage value of $60,000. During the current year, 12,000 units were produced. Prepare the necessary December 31 adjusting journal entry to record depreciation for the current year assuming the company uses: a. The straight-line method of depreciation b. The units-of-production method of depreciation c. The double-declining balance method of depreciation

Correct Answer

verified

Show Answer

Question 112

Multiple Choice

Review LaterAdd Note

Review Later

The cost of land would not include:

A) Purchase price.
B) Cost of parking lot lighting.
C) Costs of removing existing structures.
D) Fees for insuring the title.
E) Government assessments.

F) A) and E)
G) A) and D)

Correct Answer

verified

Show Answer

Question 113

Essay

Review LaterAdd Note

A company purchased equipment on June 28 of the current year and placed it in service on August 1. The following costs were incurred in acquiring the equipment: Determine the amount to be recorded as cost for the equipment.

A company purchased a tract of land for its natural resources at a cost of $1,000,000. It expects to harvest 5,000,000 board feet of timber from this land. The salvage value of the land is expected to be $200,000. The depletion expense per board foot of timber is:

Edmond reported average total assets of $9,965 million and net sales of $10,430 million. Its total asset turnover equals .96. Total Asset Turnover = Net Sales/Average Total Assets Total Asset Turnover = $10,430/$9,965 = 1.05

Betterments are:

A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a salvage value of $10,000. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts were produced. Using the units-of-production method, what is the book value of the machine at the end of the first year?

Fortune Drilling Company acquires a mineral deposit at a cost of $5,900,000 and expected salvage value of zero. It incurs additional costs of $600,000 to access the deposit, which is estimated to contain 2,000,000 tons and is expected to take 5 years to extract. What journal entry would be needed to record the expense for the first year assuming 418,000 tons were mined?

A company paid $150,000, plus a 7% commission and $5,000 in closing costs for a property. The property included land appraised at $87,500, land improvements appraised at $35,000, and a building appraised at $52,500. What should be the allocation of this property's costs in the company's accounting records?

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

Bering Rock acquires a granite quarry at a cost of $590,000, which is estimated to contain 200,000 tons of granite and is expected to take 6 years to remove. Compute the depletion expense for the first year assuming 38,000 tons were removed.

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines' first year depreciation under the units-of-production method.

A company purchased mining property for $1,837,500 containing an estimated 7,350,000 tons of ore. In Year 1, it mined and sold 857,000 tons of ore. Calculate the depletion expense for Year 1 and prepare the journal entry to record the depletion.

Depreciation is higher in earlier years and income is lower in the later years when using straight-line versus accelerated methods.

Intangible assets are nonphysical assets used in operations that confer on their owners' long-term rights, privileges, or competitive advantages.

Betterments are a type of capital expenditure.

On January 1, 2016, a company disposed of equipment for $16,200 cash that had cost $35,000, a salvage value of $5,000, and a useful life 10 years. The double-declining-balance depreciation method was used. On December 31, 2015, accumulated depreciation was $20,664. Prepare a journal entry to record the disposal of the equipment.

What are some of the variables that make a plant asset's useful life difficult to predict?

If a machine is damaged during unpacking, the repairs are added to its cost.

A company purchased a machine on January 1 of the current year for $750,000. Calculate the annual depreciation expense for each year of the machine's life (estimated at 5 years or 20,000 hours, with a salvage value of $75,000) using each of the below-mentioned methods. During the machine's 5-year life its hourly usage was: 3,000; 4,000; 5,000; 5,000; and 3,000 hours.