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Exam 10: Plant Assets, Natural Resources, and Intangibles

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Question 81

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On Jan 1^st, 2015, Server Solutions paid $200,000 to acquire Tabletz Inc., an electronic gadget-advertising website. At the time of the acquisition, Tabletz's balance sheet reported total assets of $200,000 and liabilities of $100,000. The fair market value of Tabletz's assets was $200,000. The fair market value of its liabilities was $100,000. At the end of 2018, they measured goodwill and found its fair value to be $60,000. Calculate and record the impairment of goodwill.

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Question 82

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The gain or loss on the sale of a plant asset is determined by comparing:

A) sale value and book value.
B) sale value and residual value.
C) sale value and original cost.
D) book value and residual value.

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Question 83

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Baker Inc. had reported the following details for the year ended December 31, 2012: $\begin{array} { | l | r | } \hline \text { Net sales } & \$ 24,750,000 \\\hline \text { Total assets } & 16,000,000 \\\hline \text { Total liabilities } & 9,500,000 \\\hline\end{array}$ The company's beginning total assets and liabilities were $14,000,000 and $8,000,000, respectively. Calculate the asset turnover ratio for 2012.

A lump-sum purchase or basket purchase involves paying a single price for several assets as a group.

A truck costs $300,000, and is expected to run 100,000 miles during its 5-year life. Residual value is expected to be zero because the truck was used when acquired. If the truck runs 24,000 miles the first year, how much depreciation should the company record under the units-of-production method?

In exchanges of plant assets with commercial substance, the new asset received will be recorded at its market value.

Discarding of plant assets involves disposing of the asset for no cash.

Plant assets are long-lived, tangible assets used in the operation of a business.

A plant asset is said to be fully depreciated when the book value is:

The process by which businesses spread the allocation of an intangible asset's cost over its useful life is referred to as amortization.

On January 1, 2015, Zade Manufacturing Company purchased a machine for $40,000,000. The company expects to use the machine for 24,000 hours over the next 6 years. The estimated sale value of the machine at the end of the sixth year is $40,000. The company used the machine for 3,600 hours in 2015 and 5,000 hours in 2016. What is the book value of the machine at the end of year 2016 if the company uses double-declining-balance method of depreciation? (Do not round your intermediate calculations.)

Which of the following is a characteristic of a plant asset, such as a building?