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Exam 10: Plant Assets, natural Resources, and Intangibles

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Question 91

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The cost of a plant asset includes all amounts paid to ready the asset for its intended use.

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Question 92

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Rotan Company purchased a van on January 1,2018,for $810,000.Estimated life of the van was five years,and its estimated residual value was $98,000.Rotan uses the straight-line method of depreciation.At the beginning of 2020,the company revised the total estimated life of the asset from five years to six years.The estimated residual value remained the same as estimated earlier.Calculate the depreciation expense for 2020.

A) $142,400
B) $131,300
C) $106,800
D) $71,200

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Question 93

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Long Island Company discards a truck that was originally purchased for $50,000 and had accumulated depreciation of $30,000.Prepare the journal entry for the disposal.Omit explanation.

On June 30,2018,Clooney Printers purchased a printer for $60,000.It expects the printer to last for four years and have a residual value of $9000.Compute the depreciation expense on the printer for the year ended December 31,2018,using the straight-line method.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Depreciation is the allocation of a plant asset's cost to expense over its useful life.

Impairment of an intangible asset occurs when the book value of an asset is less than the fair value.

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

Which of the following asset categories would include the cost of clearing land and removing unwanted buildings?

Freeman Company owns a delivery truck.Which of the following costs,associated with the truck,will be capitalized and depreciated?

Tulip Company purchased equipment for $58,000 on January 1,2017.On December 31,2019,the equipment was sold for $23,000.Accumulated Depreciation as of December 31,2019 was $32,000. Calculate gain or loss on the sale.

Which of the following is TRUE of goodwill?

Companies may choose to report plant assets as a single amount,with a note to the financial statements that provides detailed information,or companies may provide detailed information on the face of the statement.

U.S.Generally Accepted Accounting Principles permits the presentation of plant assets at their fair market value.

Brentwood Company purchased a mine in 2018 for $500,000 and estimated that 30,000 tons of iron ore could be extracted from it.There was no residual value.The business extracted and sold 2,500 tons of ore in 2018.How will the mine be reported on the balance sheet at the end of year 2018? (Round all intermediate calculations to the nearest cent. )Omit explanation.

Routing Solutions paid $233,000 to acquire Tabletz Company,an electronic gadget-advertising website.At the time of the acquisition,Tabletz's balance sheet reported total assets of $233,000 and liabilities of $116,500.The fair market value of Tabletz's assets was $233,000.The fair market value of its liabilities was $116,500.How much goodwill did Routing Solutions purchase as part of the acquisition of Tabletz?

Equipment was purchased for $24,000 on January 1,2018.The equipment's estimated useful life was five years,and its residual value was $4,000.The straight-line method of depreciation was used.Calculate the gain or loss on sale if the equipment is sold for $18,000 on December 31,2018,the end of the accounting period.Prepare the journal entry to record the sale of equipment.Omit explanation.

McArthur Company plans to develop a shopping center.In the first quarter,the following amounts were spent: What amount should be recorded as the land improvements cost?

The useful life of a plant asset is the length of the service period expected from the asset.

An oil well cost $2,050,000 and is calculated to hold 290,000 barrels of oil.There is no residual value.Which journal entry is needed to record the expense for the extraction of 53,000 barrels of oil during the year? All 53,000 barrels were sold during the year.(Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

IFRS permits the presentation of plant assets at their fair market value.