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

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Question 51

Multiple Choice

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

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

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Question 52

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Using different depreciation methods for book purposes versus tax purposes for the same asset is

A) not allowed since the amount can only be calculated one way or the other, not both.
B) the direct result of the differing goals of financial and tax accounting.
C) contrary to GAAP.
D) against the Internal Revenue Code, and as such, against the law.

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Question 53

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Select where the following accounts would be reported on Coca-Cola's financial statements.(Select all that apply.) -Loss on sale of patent 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

Select where the following accounts would be reported on Coca-Cola's financial statements.(Select all that apply.) -Depreciation expense 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 land and building are acquired for a lump sum, the purchase amount should be allocated on the basis of the market values of the two assets.

Waxman Company purchased a patent for $170,000 at the beginning of 2016, and estimated that its expected useful life was 10 years.The patent has a legal life of 17 years.What amount should be recorded as amortization expense for the patent in 2016?

Select the financial statement on which the user would most likely find the answer to the question given.(Select all that apply.) -Did the company purchase any intangible assets during the year?

Newco Publishing Company purchased equipment at the beginning of 2016 for $200,000.The company decided to depreciate the equipment over an 8-year period using the straight-line method.The company estimated the equipment's residual value at $20,000.The journal entry to record depreciation expense for 2016 will

If a company is concerned about minimizing its income tax burden, it would use the straight-line depreciation method to accomplish this objective.

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: -Loss of the sale of equipment

Given the following list of methods of depreciation, select the method that is best for the situation or purpose given.(Select all that apply.) This method is used in situations where technological advances are rapid.

Tarkington Beers, Inc.purchased the most popular and well-known pub in a college town.Its purchase price was $1,200,000.The appraisers determined that the land should be valued at $400,000, the building at $500,000 and the equipment at $200,000.Which of the following statements is correct?

Costs incurred related to plant assets that are already in use are called revenue expenditures if the cost increases the useful life or the asset's productivity.

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. -During the installation, the equipment was damaged and repair costs of $2,000 were incurred.

Capitalizing interest does not increase the recorded cost of a plant asset.

A building with an appraisal value of $250,000 is made available at an offer price of $180,000.The purchaser acquires the property for $35,000 in cash, a 90-day note payable for $65,000, and a mortgage amounting to $63,000.The cost basis recorded in the buyer's accounting records to recognize this purchase is

When a company discards machinery that is fully depreciated, this transaction would be recorded with the following entry:

Darrin Brown bought a pub.The purchase price was $695,000.An appraiser provided the following appraisal values: land $320,000: building $370,000 and equipment $60,000.What cost should be allocated to the building?

The Loss on Sale of Asset indicates the amount by which the asset's sales price is less than its book value.

For each of the following items, indicate whether each would be treated as a -Costs incurred prior to using the asset, such as costs to prepare the asset for use, installation costs