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Exam 8: Operating Assets: Property, Plant and Equipment, and Intangibles

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Question 101

Multiple Choice

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Norwood, Inc.purchased a crane at a cost of $80,000.The crane has an estimated residual value of $5,000 and an estimated life of 8 years, or 12,500 hours of operation.The crane was purchased on January 1, 2016 and was used 2,700 hours in 2016 and 2,600 hours in 2017. ​ -Refer to the information for Norwood, Inc. ​ Based on this information, what method of depreciation will produce themaximum depreciation expense in 2016?

A) Straight-line
B) Double-declining-balance
C) Units-of-production
D) All methods produce the same expense in 2016.

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Question 102

Multiple Choice

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For each of the following sentences , select the word or group of words that best completes the statement. -______________________________ is (are) the right to produce or sell a published work.

A) Patent
B) Copyright
C) Goodwill
D) Revenue expenditure
E) Natural resources
F) Research and development costs
G) Trademark
H) Capital expenditure

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Question 103

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On the balance sheet, a company reports plant assets by subtracting residual value from the original cost of the plant asset.

International accounting standards require companies to revalue their property, plant, and equipment to reflect fair market values.

If a company constructs an asset over a period of time and borrows money, the amount of interest incurred during construction on the borrowed money is

Select where the following accounts would be reported on Coca-Cola's financial statements.(Select all that apply.) -Cash received from the sale of a plant asset a. Balance Sheet-Property, Plant, and Equipment b. Balance Sheet-Intangible Assets c. Balance Sheet-Current Assets d. Balance Sheet-Other Assets e. Income Statement-Operating Section f. Income Statement-Other Revenue and Expense Section g. Statement of Cash Flows

When plant assets are reported, the current period's depreciation expense is subtracted from the original cost on the balance sheet.

In general, FASB standards concerning property, plant, and equipment are similar to the international accounting standards, with two important differences.

Exeter Corporation purchased a piece of equipment with a price of $80,000 on March 1, 2018.The amounts below are related to the equipment purchase.Match the items below and explain why each revenue expenditure is not capitalized. -$3,000 freight costs were paid to ship the equipment from the manufacturer.

Recently, companies have been ordered by governmental agencies to clean up environmental damages caused by business operations.How should costs incurred in these situations be treated?

Land is not a depreciable asset, but the amount allocated to the building is subject to ______________.

Select the account that would be increased to show each of the following costs. -The costs to pave a parking lot

A change in estimate of an asset's residual value involves restating the income statements of past periods for the estimate change.

A gain is recognized on the disposal of plant assets when:

Given below is a list of items that may be reported on a statement of cash flows.Identify each as one of the following using the indirect method: -Amortization of a copyright

On the balance sheet, the cumulative amount of plant and equipment already expensed is reported in an account called

Capitalizing an expenditure rather than recording it as a revenue expenditure

When constructing assets, capitalized interest is based on

Aliquippa Co.purchased equipment at the beginning of 2016 for $60,000.In addition, Aliquippa paid $2,000 for delivery of the equipment to its plant and $1,000 for installation of the equipment.The equipment has an estimated residual value of $7,000 and an estimated life of 7 years or 70,000 hours of operation.Aliquippa is looking at alternative depreciation methods for the equipment.Calculate the following: A. The depreciation expense for the year 2016 using the straight-line depreciation method. B. The total accumulated depreciation at December 31,2017 , using the units-of-production depreciation method. Assume that the equipment is operated for 15,000 hours in 2016 and 12,000 hours in 2017. C. The book value of the equipment at December 31, 2016, using the double-declining-balance depreciation method. D. Which of the above methods is considered accelerated? E. What are the advantages of using an accelerated depreciation method as compared to the straight-line method for lowering taxes early in the life of the equipment?

Identify where each of the following accounts would be reported on Coca-Cola's financial statements. -Building