ACCT 211 Read & Interact Chapter 8 Accounting for Long-Term Assets solutions complete answers

ACCT 211 Read & Interact Chapter 8 Accounting for Long-Term Assets solutions complete answers 

 

A plant asset trade-in with commercial substance means that it changes the company's:

 

_______ are nonphysical assets used in operations that give companies long-term rights, or competitive advantages.

 

Daley Co. owns a mineral deposit with an estimated 600,000 tons of available ore. It was purchased for $300,000 and has no salvage value. During the current period, Daley mined and sold 40,000 tons of ore. Depletion expense for the period will be how much?

 

Seven Co. owns a coal mine with an estimated 1,000,000 tons of available coal. It was purchased for $300,000 and has $50,000 salvage value. During the current period, Seven mined and sold 200,000 tons of coal. Depletion expense for the period will be how much?

 

_______ are expenditures that keep an asset in good operating condition. They are necessary if an asset is to perform to expectations over its useful life.

 

The purchase of a group of plant assets for one price is called a ______ purchase.

 

______ is the process of allocating the cost of a plant asset to expense while it is in use.

 

Ion Co. purchased land for $190,000. Ion also paid $5,000 in real estate commissions, $1,000 in legal fees, and $500 in title insurance fees. Ion should record the cost of this land at:

 

(Plant/Current)  assets purchased as a group in a single transaction for a lump-sum price are allocated the purchase price based on their relative market values.

 

Land   are assets that are additions to land and have limited useful lives, such as walkways and fences.

 

Geo Co. purchased a building for $400,000. In addition, Geo paid $35,000 for taxes and lawyer fees. Geo also paid $60,000 to modify the building, changing the layout specifically for Geo's needs. Geo should record the building at $ .

 

Alin Co. purchases a building for $300,000 and pays an additional $30,000 for title fees and lawyer fees. Alin also pays $20,000 in renovations, including painting, carpet, lighting, etc. Alin should record the cost of the building at:

 

PT Co. purchased land and an existing building for $200,000. In addition, PT paid real estate commissions of $15,000. PT removed the unwanted building and graded the land for a total cost of $35,000. PT should record the cost of the land at:

 

Assets that increase the benefits of land, have a limited useful life, such as parking lots and lighting systems, are called:

 

Plant assets are recorded at cost, which includes all expenditures necessary to get the asset in place and ready for use. All of the following would be included as part of the cost of a plant asset except:

 

A plant asset trade-in with commercial substance implies that it alters the company's:

 

Total asset turnover is computed as net       /average total assets.

 

If an asset exchange has commercial substance, a gain or loss is recorded based on the difference between the       value of the asset given up and the market value of the asset received.

 

The total asset turnover ratio is computed by taking net sales divided by:

 

Copyrights, trademarks, and other intangible assets are expensed over their useful lives through the process of:

 

_______ are nonphysical assets (used in operations) that confer on their owners long-term rights, or competitive advantages.

 

A company acquires a patent for $20,000 to manufacture and sell an item. The company intends to hold the patent for 5 years. Amortization for the first year will be recorded with a debit to Amortization Expense for $     .

 

_______ is the process of allocating the cost of a natural resource to the period when it is consumed.

 

Which of the following assets are amortized? (Check all that apply.)

 

Brice Co. purchases land in order to drill oil. This oil field would be classified as a(n) _______ on the balance sheet.

 

A company owns an asset that is fully depreciated. The asset is no longer being used in operations and has no market value. The company has decided to ________ the asset by recording an entry to remove it from the balance sheet.

 

_______ are expenditures that keep an asset in normal, good operating condition. They are necessary if an asset is to perform to expectations over its useful life.

 

When a company revises an estimate used to record depreciation expense, the company should revise depreciation by using the formula (_______ - revised salvage value)/revised remaining useful life.

 

(Revenue/Capital)      expenditures are additional costs of plant assets that do not materially increase the asset's life or productive capabilities.

 

On October 30, Cleo Co. purchased a machine for $26,000 and estimates it will use the machine for four-years with a $2,000 salvage value. Using the straight-line depreciation method, compute the machine's first year partial depreciation expense for October 30 through December 31.

 

The factors necessary to compute depreciation include (cost/selling price/market value)     , salvage value and useful life.

 

Straight-line depreciation can be calculated by taking:

 

The purchase of multiple plant assets for one purchase price is called a ______ purchase.

 

Assets that increase the benefits of land, have a limited useful life, and are depreciated—such as parking lots and street lights—are called:

 

Wen Co. purchased a building for $200,000. Wen paid $20,000 in lawyer and title fees. Wen also paid an additional $15,000 to modify the building in order to accommodate his business needs. Wen should record the cost of the building at:

 

True or false: The cost of plant assets should include all of the normal and reasonable expenditures necessary to get the asset in place and ready for its intended use, including repairs to damages incurred after installation

 

Ironworks Co. sells a machine that cost $5,000 with a current book value of $1,500 for $2,000 cash. Ironworks will record a debit to which account and for how much?

 

Ring Co. owns a delivery van that was purchased two years ago for $25,000. Ring has depreciated the van for two years at a straight-line amount of $4,000 per year. The book value of this van at the end of the second year would be $_____.

 

The cost at which a company records purchases of machinery and equipment should include which of the following? (Check all that apply.)

 

Zion Co. paid cash for an upgrade to an existing machine that would reduce the amount of waste produced by the machine (and therefore, increasing efficiency). The journal entry to record this upgrade would include which of the following entries?

 

The _____ life of a plant asset is the length of time it is productively used in a company's operations.

 

On December 31, Briar Co. disposed of a piece of equipment that cost $6,000 with accumulated depreciation of $4,500. The entry to record this disposal would include a debit to which account and for how much?

 

A plant asset is (depreciated/discarded/obsolete)      when it is no longer useful to the company, and it has no market value.

 

A company sells a machine that cost $7,000 for $500 cash. The machine had $6,500 accumulated depreciation. The entry to record this transaction will include which of the following entries?



    are assets that are physically consumed when used, such as mineral deposits and oil and gas fields.

 

Straight-line depreciation is calculated by taking cost minus (salvage/market)      value divided by useful life. 

 

Plant assets should be recorded at cost, including all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use. This would include which of the following costs? (Check all that apply.)

 

Grand Co. owns one copier that was purchased for $10,000 three years ago. The depreciation expense taken on the copier each year has been $2,700; $1,800; and $2,200, based on the number of copies that have been made on the copier. Based on this information, the company uses the ________ depreciation method.

 

_________ value, also called residual value or scrap value, is an estimate of the assets value at the end of its benefit period.

 

The depreciation method that determines the depreciation charge for the period by multiplying a depreciation rate (often twice the straight-line rate) by the assets beginning-period book value is known as the     method.

 

_____ is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting for its use.

 

Which of the following asset(s) are not considered intangible assets? (Check all that apply.)



A delivery van that cost $45,000 with accumulated depreciation of $15,000 is sold for $20,000. How much gain or loss will be recognized on this sale?

 

On January 1, Enco Co. purchases a milling machine for $15,000. The machine is expected to last seven years and have a salvage value of $1,000. Assuming the company uses the straight-line method, depreciation expense should be $______________ per year.

 

ATZ Co. sells equipment that cost $9,000 with current accumulated depreciation of $8,000 for $2,000 cash. To record this transaction, ATZ will credit which accounts? (Check all that apply.)



Juno Co. purchased a machine for $10,000 and estimates it will use the machine for four years with a $2,000 salvage value. Using the double declining balance depreciation method, compute the machine’s first year depreciation expense.

 

When considering the sale of a plant asset, match the following outcomes to the appropriate situations.

 

Which of the following factors determine depreciation? (Check all that apply.)

 

Rino Co. pays $35,000 for equipment. The machine's useful life is estimated at 10 years, or 50,000 units of product with a $5,000 salvage value. During the first year, the machine produced 12,000 units of product. How much depreciation expense will Rino record this year based on the units-of-production depreciation method?

 

    assets are used in a company’s operations that have a useful life of more than one accounting period.

 

1.
Accumulated depreciation is a ____ asset account (one that is linked with the plant asset account, but has an opposite normal balance) and is reported on the balance sheet.
 
 
2.
Accumulated depreciation is reported on which financial statement?
 
 
3.
_____________ are expenditures that keep an asset in normal, good operating condition. They are necessary if an asset is to preform to expectations over its useful life.
 
 
4.
___________ are expenditures that make a plant asset more efficient or productive, but do not always increase an asset's useful life.
 
 
5.
____________ assets purchase as a group in a single transaction for a lump-sum price (also called a lump-sum, group, bulk, or basket purchases) are allocated the purchase price based on their relative market values.
 
 
6.
Bina Co. purchased a vehicle on January 1st for $15,000 and estimates it will use the vehicle for eight years with a $3,000 salvage value. Using the double declining- balance depreciation method, compute the vehicle's second year depreciation expense.
 
 
7.
Book value can be calculated by taking an asset's acquisition cost less its _____ _____.
 
 
8.
calculate depletion expense in a period:
 
 
9.
Cen Co. purchases land and a building for $130,000. The land is appraised at $100,000 and the building at $150,000. Allocating the cost based on market values, the land should be recorded at what amount?
 
 
11.
The cost of a plant asset includes:
 
 
12.
Determine what are some expenses that are considered revenue expanditures related to a company vehicle.
 
 
13.
Digg Co. installs a manufacturing machine in its factory at the beginning of the year at a cost of $36,000. The machine's useful life is estimated at 10 years, or 300,000 units of product, with a $6,000 salvage value. During its first year, the machine produces 14,000 units of product. What is the machine's first year depreciation expense under the units-of-production method?
 
 
14.
Ella Co. owns a mineral deposit and recognizes $15,000 of depletion expense during the period. This entry will be recorded with a credit to:
 
 
15.
Geo Co. purchase a building for $400,000. In addition, Geo paid $35,000 closing fees (including brokerage, title, attorney fees). Geo also paid $50,000 to modify the building, changing the layout specifically for Geo's needs. Geo should record the building $______.
 
 
17.
Land _____ are assets that increase the benefits of land, have a limited useful life, and are depreciated- such as sidewalks and fences.
 
 
19.
An oil company recognizes the cost of discovering and operating oil wells by recording ______ expense for each unit of oil used.
 
 
20.
On January 24, Bore Co. purchased a delivery van for $22,000. Bore expects to drive the van for about 5 years or 100,000 miles, before disposing of it for an estimated salvage value of $2,000. During the first year, Bora drives the van for 18,000 miles. How much would depreciation expense be if Bora uses the unit-of-production depreciation method?
 
 
21.
On June 1, Harding Co. purchased a machine for $14,000 and estimates it will use the machine for five-years with a $2,000 salvage value. Using straight-line depreciation method, compute the machine's first year (partial) depreciation expense for June 1st through December 31st.
 
 
23.
The process of allocating the cost of a natural resource to a period when it is consumed requires a debit entry to the ___ _____ account.
 
 
24.
PT Co. purchased land and an existing building for $200,000. In addition, PT paid closing costs of $15,000. PT removed the building and regraded the land for a total cost of $35,000. PT should record the cost of the land for:
 
 
27.
Rojo's Roses Co. received an invoice for replacement of the engine on its main delivery van. The replacement will extend the life of the van an additional three years. The entry to record receipt of the invoice would include?
 
 
28.
Seven Co. owns a coal mine with an estimated 1,000,000 tons of available cost. It was purchased for $300,000 and has $50,000 salvage value. During the current period, Seven mined and sold 200,000 tons of coal. Depletion expense for the period will be how much?
 
 
 
 
 
 
 
 
 

29.
Sioux Co. replaced the roof on tis existing building, therefore increasing the building's life by 10 years. The cost of the roof is considered an:
 
 
30.
T. Chung Co. sold a computer for $500 cash. The computer cost $3,000 and had accumulated depreciation of $2,200 at the time of the sale. Chung will record the sale with an entry to the ______ on Disposal of Equipment account in the amount of______.
 
 
31.
To calculate depletion expense, first determine the depletion per unit. Depletion per unit can be calculated by taking (cost ______) / total units of capacity.
 
 
32.
Tops Co. purchases equipment for $12,000 and has been using straight-line depreciation, estimating a 5-year life and $500 salvage value. At the beginning of the third year. Tops decides to use the equipment for a total of 6-years with no salvage value. Compute the revised depreciation for the third year.
 
 
33.
Trio Co. reported that maintenance and repair costs are expensed as incurred. If Trio's current year machinery and equipment repair costs are $8,200, which accounts would be impacted to complete the journal entry?
 
 
34.
True or False: The book value of an asset when using straight-line depreciation is always greater that the book value from using double-declining-balance, except at the beginning and end of the asset's useful life, when it is the same.
 
 
35.
What are some expenses related to a building would be classified as a capital expenditure?
 
 
36.
When a company revises an estimate used to record depreciation expense, the company should revise depreciation by using the formula?
 
 
37.
Zen Co. sells a copier machine for $2,000. The copier cost Zen $6,000 and at the time of sales accumulated depreciation was $2,500. Zen will record this sale with what debit entry?
 
 
 

1.
 
 
Bina Co. purchased a vehicle on January 1st for $15,000 and estimates it will use the vehicle for eight years with a $3,000 salvage value. Using the double declining-balance depreciation method, compute the vehicle's second year depreciation expense.
2.
 
 
On January 24, Bora Co. purchased a delivery van for $22,000. Bora expects to drive the van for approximately 5 years or 100,000 miles, before disposing of it for an estimated salvage value of $2,000. During the first year, Bora drives the van for 18,000 miles. How much would depreciation expense be if Bora uses the units-of-production depreciation method?
3.
 
 
On January 2, Dice Co. purchases a mixing machine for $25,500. The machine is expected to last four years and have a salvage value of $5,500. Assuming the company uses the straight-line method, depreciation expense should be __________ per year.
4.
 
 
Alin Co. purchases a building for $300,000 and pays an additional $30,000 for closing costs (brokerage, title, attorney fees). Alin also pays $20,000 in renovations, including painting, carpet, lighting, etc. Alin should record the cost of the building at __________.
7.
 
 
Trio Co. reported that maintenance and repair costs are expensed as incurred. If Trio's current year machinery and equipment repair costs are $8,200, which accounts would be impacted to complete the journal entry? (Check all that apply.)

A. Debit Repairs Expense.
B. Credit Machinery & Equipment.
C. Debit Machinery & Equipment.
D. Debit Cash.
E. Credit Cash.
F. Credit Repairs Expense.
8.
 
 
Determine which of the following expenses are considered revenue expenditures related to a company vehicle. (Check all that apply.)

A. Dent repair
B. Engine overhaul
C. Car wash
D. Installation of special equipment
E. Oil change
9.
 
 
An __________ yields larger depreciation expenses in the early years of an asset's life and less depreciation in later years.
11.
 
 
When the book value is greater than the selling price, __________ occurs.

A. loss on sale of asset
B. gain on sale of asset
C. no gain or loss is recognized
12.
 
 
The process of systematically allocating the cost of an asset to expense over its estimated useful life.
13.
 
 
The net balance amount is the __________, or simply book value, and is computed as the asset's total cost less its accumulated depreciation.
14.
 
 
Which of the following items are plant assets? (Check all that apply.)

A. Land held for investment.
B. Equipment being used in the office.
C. Equipment with no value.
D. Building being used for operations.
15.
 
 
__________, also called improvements, are expenditures that make a plant asset more efficient or productive. It often involves adding a component to an asset or replacing one of its old components with a better one and does not always increase an asset's useful life. For example, replacing manual controls on a machine with automatic controls.
16.
 
 
When the book value is less than the selling price, __________ occurs.

A. loss on sale of asset
B. gain on sale of asset
C. no gain or loss is recognized
17.
 
 
A __________ account is charged for the costs of purchasing or constructing a building that is used in operations. When purchased, costs usually include its purchase price, brokerage fees, taxes, title fees, and attorney fee.
18.
 
 
__________, also called balance sheet expenditures, are additional costs of plant assets that provide benefits extending beyond the current period. They are debited to asset accounts and reported on the balance sheet. Examples are roofing replacement, plant expansion, and major overhauls of machinery and equipment.
19.
 
 
Consistent with the __________ principle, plant assets should be recorded at cost, which includes all the normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.

A. monetary unit
B. plant asset
C. cost
D. full disclosure
 
 
 
 
 
 
 

21.
 
 
Privo Co. purchases a machine that cost $15,000. Privo estimates that a 5-year life with no salvage value. The first three years of depreciation expense are $6,000; $3,600; and $2,160, respectively. Based on this information, Privo is using the __________ depreciation method.

A. straight-line
B. units-of-production
C. declining-balance
22.
 
 
Revising an estimate of the useful life or salvage value of a plant asset is referred to as a __________ and is reflected in current and future financial statements, not in prior statements.
23.
 
 
Forward Co. discarded a machine that cost $5,000 and was fully depreciated. The entry to record this transportation would include a credit to the __________ account.

A. Accumulated Depreciation - Machinery
B. Depreciation Expense - Machinery
C. Machinery
D. Loss on Disposal of Machinery
24.
 
 
When the book value is equal to the selling price, __________ occurs.

A. loss on sale of asset
B. gain on sale of asset
C. no gain or loss is recognized
25.
 
 
Accumulated depreciation is a __________ asset account (one that is linked with the plant asset account, but has an opposite normal balance) and is reported on the balance sheet.
26.
 
 
A __________ gives its owner the exclusive right to publish and sell a musical, literary, or artistic work during the life of the creator for plus 70 years, although the useful life of most of these is much shorter.
27.
 
 
Plants are recorded at __________ when acquired. This includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.
28.
 
 
The first factor that determines depreciation. The __________ of a plant asset consists of all necessary and reasonable expenditures to acquire it and to prepare it for its intended use.
29.
 
 
Rojo's Roses Co. received an invoice for replacement of the engine on its main delivery van. The replacement will extend the life of the van an additional three years. The entry to record receipt of the invoice would include which of the following entries? (Check all that apply.)

A. Credit to Repairs Expense.
B. Debit to Cash.
C. Debit to Repairs Expense.
D. Credit to Accounts Payable.
E. Credit to Equipment.
F. Debit to Equipment.
30.
 
 
The most common accelerated method is the __________ of depreciation, which uses a depreciation rate that is a multiple of the straight-line rate and applies it to the asset's beginning-of-period book value. The amount of depreciation declines each period because book value declines each period.
31.
 
 
The process of allocating the cost of a natural resource to the period when it is consumed.
32.
 
 
__________ is equal to an asset's depreciation per unit (the sum of an asset's cost less its salvage value divided by the total units of capacity) multiplied by the number of units extracted and sold in a period.

X = Depletion per unit x Units extracted and sold in period

or

X = [(Cost — Salvage value)/Total units of capacity] x Units extracted and sold in period
33.
 
 
Three factors that determine __________ are:

1. Cost
2. Salvage value
3. Useful life
 

35.
 
 
Using the units-of-production depreciation method, __________ is equal to depreciation per unit (sum of an asset's total cost less it's salvage value divided by the total number of units expected to be produced during its useful life) multiplied by the units produced in the period.

X = [(Cost — Salvage value)/Total units of production] x Units produced in period

Or,

X = Depreciation per unit x Units produced in period
36.
 
 
Using the DDB method, the __________ equals the DDB rate multiplied an asset's beginning of period book value.

X = DDB rate x Beginning-period book value.
38.
 
 
Regardless of the reason, __________ occur in one of three basic ways:

1. Discarding
2. Sale
3. Exchange
39.
 
 
A common depreciation rate for the declining-balance method is double the straight-line rate. This is called the __________.
40.
 
 
Expenditures that extend the asset's useful life beyond its original estimate. __________ are capital expenditures because they benefit future periods.
41.
 
 
__________ and __________ are rights that a company or government grants an entity to deliver a product or service under specified conditions. For example, McDonald's, Pizza Hut, and Major League Baseball.
42.
 
 
The amount by which a company's value exceeds the value of its individual assets and liabilities. For example, superior management, skilled workforce, quality products or services, or other competitive advantages.
43.
 
 
An intangible asset that is not amortized is tested annually for __________—if necessary, this type of loss is recorded.
44.
 
 
A permanent decline in the fair value of an asset relative to its book value.
45.
 
 
Refers to the insufficient capacity of a company's plant assets to meet its growing productive demands.
46.
 
 
If an intangible asset has an __________—meaning that no legal, regulatory, contractual, competitive, economic, or other factors limit its useful life—it should not be amortized.
47.
 
 
Nonphysical assets (used in operations) that confer on their owners long-term rights, privileges, or competitive advantages. Examples are patents, copyrights, licenses, leaseholds, franchises, goodwill, and trademarks.
48.
 
 
__________ is the earth's surface and has an indefinite (unlimited) life. Its costs include expenditures necessary to make the property ready for its intended use.
49.
 
 
__________ are additions to land and have limited useful lives. Examples are parking lot surfaces, driveways, walkways, fences, landscaping, sprinkling systems, and lighting systems.
50.
 
 
Property is rented under a contract called a __________.
51.
 
 
A __________ refers to the rights the lessor grants to the lessee under the terms of the lease. It is an intangible asset for the lessee.
52.
 
 
A lessee sometimes pays for alterations or improvements to the leased property such as partitions, painting, and storefronts. These alterations and improvements are called __________, and the lessee debits these costs to this account.
53.
 
 
The one who secures the right to possess and use the property is called the __________.
54.
 
 
The property's owner, called the __________, grants the lease.
55.
 
 
If an intangible asset has a __________, its cost is systematically allocated to expense over its estimated useful life through the process of amortization.
56.
 
 
T. Chung Co. sold a computer for $500 cash. The computer cost $3,000 and had accumulated depreciation of $2,200 at the time of the sale. Chung will record the sale with an entry to the ___________ (gain/loss) on the Disposal of Equipment account in the amount of __________.
 

57.
 
 
Plant assets sometimes are purchased as a group in a single transaction for a lump-sum price. This transaction is called a __________, or group, bulk, or basket purchase.
58.
 
 
The cost of __________ consist of all costs normal and necessary to purchase them and prepare them for their intended use. These include purchase price, taxes, transportation charges, insurance while in transit, installing, assembling, and testing.
59.
 
 
The U.S. federal income tax law has rules for depreciating assets. These rules include the __________, which allows straight-line depreciation for some assets but requires accelerated depreciation for most kinds of assets.
60.
 
 
Brice Co. purchases land in order to drill for oil. This oil field would be classified as a(n) __________ on the balance sheet.
61.
 
 
Assets that are physically consumed when used. Examples are standing timber, mineral deposits, and oil and gas fields.
62.
 
 
Refers to the condition of a plant asset that is no longer useful in producing goods or services with a competitive advantage because of new inventions and improvements.
63.
 
 
__________ are expenditures to keep an asset in normal, good operating condition. They are necessary if an asset is to perform over its useful life. Examples are normal costs of cleaning, lubricating, adjusting, oil changing, and replacing small parts of a machine.
64.
 
 
A __________ is an exclusive right granted to its owner to manufacture and sell a patented item or use a process for 20 years.
65.
 
 
Tangible assets used in a company's operations that have a useful life of more than one accounting period.
66.
 
 
__________, also called income statement expenditures, are additional costs of plant assets that do not materially increase the asset's life or productive capabilities. They are recorded as expenses and deducted from revenues in the current periods income statement. Examples are cleaning, repainting, adjustments, and lubricants.
67.
 
 
The second factor that determines depreciation. __________, also called residual value or scrap value, is an estimate of the asset's value at the end of its benefit period.
68.
 
 
__________ is equal to the depreciable cost of an asset (cost less salvage value) divided by the number of accounting periods in the asset's useful life.

X = (Cost — Salvage Value)/Useful Life in Periods
69.
 
 
__________ charges the same amount of expense to each period of the asset's useful life.
70.
 
 
One important measure of a company's ability to use its assets is __________. It is equal to net amounts earned from the sale of products and services divided by the average total resources devoted to operating the company and generating sales.

X = Net sales/Average total assets
71.
 
 
A __________ is a symbol, name, phrase, or jingle identified with a company, product, or service. Examples are the Nike swoosh, Big Mac, Coca-Cola, and Corvette.
72.
 
 
__________ charges a varying amount to expense for each period of an asset's useful life depending on its usage.
73.
 
 
The third factor that determines depreciation. The __________ of a plant asset is the length of time it is productively used in a company's operations. This time might not be as long as the asset's total productive life.
 

.
 
 
On June 1, Harding Co. purchased a machine for $14,000 and estimates it will use the machine for five-years with a $2,000 salvage value. Using the straight-line depreciation method, compute the machine's first year (partial) depreciation expense for June 1st through December 31st
2.
 
 
Tops Co. purchases equipment for $12,000 and has been using straight-line depreciation, estimating a 5-year life and $500 salvage value. At the beginning of the third year, Tops decides to use the equipment for a total of 6-years with no salvage value. Compute the revised depreciation for the third year
3.
 
 
Bina Co. purchased a vehicle on January 1st for $15,000 and estimates it will use the vehicle for eight years with a $3,000 salvage value. Using the double declining-balance depreciation method, compute the vehicle's second year depreciation expense
4.
 
 
On January 2, Dice Co. purchases a mixing machine for $25,500 The machine is expected to last four years and have a salvage value of $5,500. Assuming the company uses the straight-line method, depreciation expense should be $5,000 per year.
5.
 
 
Rino Co. pays $35,000 for equipment. The machine's useful life is estimated at 10 years, or 50,000 units of product with $5,000 salvage value. During the first year, the machine produced 12,000 units of product. How much depreciation expense will Rino record this first year based on the units-of-production depreciation method?
6.
 
 
Arc. Co purchased a piece of equipment for $25,000. At the end of the year, the book value of the equipment is $12,000. The salvage value is 0. How much is accumulated depreciation at the end of the period?
7.
 
 
Cen Co. purchases land and a building for $130,000. The land appraised at $100,000 and the building at $150,000. Allocating the cost based on market values, the land should be recorded at what amount?
8.
 
 
Ion Co. purchased land for $190,000. Ion also paid $5,000 in brokerage fees, $1,000 in legal fees, and $500 in title costs. Ion should record the cost of this land to be:
9.
 
 
PT Co. purchased land and an existing building for $200,000. In addition, PT paid closing costs of $15,000. PT removed the building and regraded the land for total cost of $35,000. PT should record the cost of the land for:
10.
 
 
Geo Co. purchased a building for $400,000. In addition, Geo paid $35,000 closing fees (including brokerage, title, and attorney fees). Geo also paid $60,000 to modify the building, changing the layout specifically for Geo's needs. Geo should record the building at $495000
11.
 
 
Accumulated depreciation is reported on which of the following financial statements?
12.
 
 
Niren Co. made modifications to a manufacturing machine that increased its productivity by 40%. Niren would classify this expense as a(n):
13.
 
 
Book value can be calculated by taking an asset's acquisition cost less its accumulated depreciation
15.
 
 
Accumulated depreciation is a contra asset account (one that is linked with the plant asset account, but has an opposite normal balance) and is reported on the balance sheet
16.
 
 
Trio Co. reported the maintenance and repair costs are expensed as incurred. If Trio's current year machinery and equipment repair costs are $8,200, which accounts would be impacted to complete the journal entry?
18.
 
 
Rojo's Roses Co. received an invoice for replacement of the engine on its main delivery van. The replacement will extend the life of the van an additional three years. The entry to record the receipt of the invoice would include which of the following entries?
 
 
 
 
 
 
 

23.
 
 
Which of the following items are plant assets?
25.
 
 
Sioux Co. replaced the roof on its existing building, therefore increasing the building's life by 10 years. The cost of the roof is considered a(n):
26.
 
 
Which of the following situations will result in recognizing a gain on sale of a plant asset?
27.
 
 
A(n) impairment is a permanent decline in that market value of an asset relative to its book value
28.
 
 
The insufficient capacity of a company's plant assets to meet its growing productive demands is called:
29.
 
 
Depreciation expense is reported as a decrease in which of the following financial statements?
30.
 
 
Land improvements are assets that increase the benefits of land, have a limited useful life, are depreciated-such as sidewalks and fences
31.
 
 
T. Chung Cho. sold a computer for $500 cash. The computer cost $3,000 and had a accumulated depreciation of $2,200 at the time of the sale. Chung will record the sale with an entry to the Loss on Disposal of Equipment account in the amount of $300
33.
 
 
Modified Accelerated Cost Recovery System (MACRS) is a depreciation method that allows companies to delay depreciation expense for tax purposes
34.
 
 
Determine which of the following expenses related to a building would be classified as a capital expenditure
35.
 
 
The term obsolescence refers to a plant asset that is no longer useful in producing goods or services with a competitive advantage because of new inventions and improvements
36.
 
 
Ordinary repairs are expenditures that keep an asset in normal, good operating condition. They are necessary if an asset is to perform to expectations over its useful life
37.
 
 
Plant assets purchased as a group in a single transaction for a lump-sum price (also called lump-sum, group, bulk, or basket price) are allocated the purchase prise based on their relative market values
40.
 
 
Revenue expenditures are additional costs of plant assets that do not materially increase the asset's life or productive capabilities
 

44.
 
 
Martinez Co. sells a machine that cost $10,000 with accumulated depreciation of $8,000 for $2,000 cash. The entry to record the transaction will recognize a gain or loss of how much?
45.
 
 
The book value of an asset when using straight-line depreciation is always greater than the book value from using double-declining-balance, except at the beginning and end of the asset's useful life, when it is the same
48.
 
 
Which of the following factors determine depreciation?
 

2.
Accumulated depreciation is a _______ asset account (one that is linked with the plant asset account, but has an opposite normal balance) and is reported on the balance sheet.
 
 
3.
Accumulated depreciation is reported on which of the following financial statements?
 
 
4.
______________________ are additional cost of plant assets that do not materially increase the assets's life or productive capabilites
 
 
5.
________ assets are assets used in a company's operations that have a useful life of more than one accounting period
 
 
6.
__________ assets purchased as a group in a single transaction for a lump sum price (also called a lump-sum, group, bulk, or basket purchase) are allocated the purchase price based on their relative market values.
 
 
8.
Bina Co. purchased a vehicle on January 1st for $15,000 and estimates it will use the vehicle for eight years with a $3,000 salavge value. Using the double declining balance depreciation method, compute the vehicles second year depreciation expense.
 
 
9.
Bina Co. purchased a vehicle on January 1st for $15,000 and estimates it will use the vehicle for eight years with a $3,000 salvage value. Using the double declining-balance depreciation method, compute the vehicles second year depreciation expense
 
 
10.
Book value can be calculated by taking an asset's acquisition costs less its_________________________ __________
 
 
11.
Book value is equal to the selling price
 
 
12.
Book Value is greater than selling price
 
 
13.
Book value is less than selling price
 
 
15.
Consistent with the____ principle, plant assets should be recorded at cost, which includes all the normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.
 
 
17.
The cost of a plant asset includes the following:
 
 
19.
Depreciation Expense is reported on which of the following financial statements?
 
 
20.
Determine which of the following expenses are considered revenue expenditures related to a company vehicle.
 
 
21.
Determine which of the following expenses related to a building would be classified as a capital expenditure.
 
 
22.
___________________ expenditures are additional cost of plant assets that provide extending beyond the current periods, such as a plant expansion, or machine overhaul.
 
 
23.
The factors necessary to compute depreciation include all of the following, except:
~cost
~book value
~salvage value
~useful life
 
 
24.
Forward Co. discarded a machine that cost $5,000 and was fully depreciated. The entry to record this transaction would include a credit to the _________ account.
 
 
25.
Geo Co. purchased a building for $400,000. In addition, Geo paid $35,000 closing fees (including brokerage, title, and attorney fees). Geo also paid $60,000 to modify the building, changing the layout specifically for Geo's needs. Geo should record the building at $
 
 
27.
Ion Co. purchased land for $190,000. Ion also paid $5,000 in brokerage fees, $1,000 in legal fees, and $500 in title cost. Ion should record the cost of this land to be:
 
 
 
 
 
 
 
 
 

30.
Land _________________ are assets that increase the benefits of land, have a limited useful life, and are depreciated- such as sidewalks and fences.
 
 
31.
Martinez Co. sells a machine that cost $10,000 with accumulated depreciation of $8,000 for $2,000 cash. The entry to record this transaction will recognize a gain or loss of how much?
 
 
33.
On January 24, Bora Co. purchased a delivery van for $22,000. Bora expects to drive the van for approximately 5 years or 100,000 miles, before disposing of it for an estimated salvage value of $2,000. During the first, Bora drives the van for 18,000 miles. How much would depreciation expense be if Bora uses the units-of-production depreciation method?
 
 
34.
On January 24, Bora Co. purchased a delivery van for $22,000. Bora expects to drive the van for approximately 5 years or 100,000 miles, before disposing of it for an estimated salvage value of $2,000. During the first year, Bora drives the van for 18,000 miles. How much would depreciation expense be if Bora uses the units-of-production depreciation method?
 
 
36.
Privo Co. purchases a machine that cost $15,000. Privo estimates a 5-year life with no salvage value. The first three years of depreciation expense are $6,000; $3,000; and $2,160, respectively. Based on this information, Privo is using the ________ depreciation method.
 
 
 

38.
Rojo's Roses Co. received an invoice for replacement of the engine on its main delivery van. The replacement will extend the life of the van an additional three years. The entry to record receipt of the invoice would include which of the following entries?
 
 
40.
T. Chung Co. sold a computer for $500 cash. The computer cost $3,000 and had accumulated depreciation of $2,200 at the time of the sale. Chung will record the sale with an entry to the ____________ on disposal of equipment account in the amount of ______.los
 
 
42.
Tops Co. purchases equipment for $12,000 and has been using straight-line depreciation, estimating a 5-year life and $500 salvage value. At the beginning of the third year, Tops decides to use the equipment for a total of 6-years with no salvage value. Compute the revised depreciation for the third year.
 
 
43.
Trio Co. reported that maintenance and repair cost are expense as incurred. If Trio's current year machinery and equipment repair cost are $8,200, which accounts would be impacted to complete the journal entry?
 
 
45.
Which depreciation method will compute the most depreciation expense over the life of the asset?
 
 
46.
Which of the following expenses would not be considered an ordinary repair?
 
 
47.
Which of the following items are plant assets? (Check all that apply)

~Equipment being used in the office
~Equipment with no value
~Land held for investment
~Building being used for operations
 
 
48.
Which of the following situations will result in recognizing a gain on sale of a plan asset?
 
 
 

1.
Accumulated amortization is reported on the
 
 
2.
Accumulated depreciation is a what account
 
 
3.
Accumulated depreciation is considered a _____ and is recorded on the _____
 
 
4.
Also called residual or scrap value, is an estimate of the asset's value at the end of its benefit period
 
 
6.
ATZ Co. sells equipment that costs $9,000 with current accumulated depreciation of $8,000 for $2,000 cash. To record this transaction, ATZ will credit which accounts?
 
 
7.
Betterment
 
 
8.
Book value can be calculated by taking the asset's acquisition cost less
 
 
9.
Book value is equal to the selling price
 
 
10.
Book value is less than the selling price
 
 
11.
Book value is more than the selling price
 
 
13.
A company sells a machine that costs $7000 for $500. The machine had $6500 accumulated depreciation. The entry to record this transaction is....
 
 
14.
A company will recognize the cost of a patent
 
 
15.
The cost of a plant asset includes
 
 
17.
Depreciation expense is reported as decrease in what financial statement?
 
 
18.
The depreciation method the determines the depreciation charge for the period by multiplying a depreciation rate by the assets beginning period book value is known as the
 
 
21.
The factors necessary to compute the depreciation include (cost/selling price/market value) salvage value, and useful life.
 
 
22.
An impairment
 
 
23.
The insufficient capacity of a company's plant assets to meet its growing productive demand
 
 
24.
Intangible assets, such ass goodwill, continue indefinitely into the future nd are not amortized. Instead, they are tested annually for ____
 
 
25.
____ Is measured as the excess cost of an acquired entity over the value of the acquired net assets
 
 
26.
________ Is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use.
 
 
30.
Nimo Co. purchased a machine for $12,000 and estimates it will use the machine for 5 years with a $2,000 salvage value. Using the double decline balance depreciation method, compute the machine's first year depreciation expense.
 
 
31.
One major difference between GAAP and IRFS in accounting for plant assets is that IRFS allows companies to
 
 
34.
A patent was purchased for $20,000 and expected to be used for its 20 year life with no salvage value. The entry to expense the patent during the second year of life will include...
 
 
35.
Per SFAS 153, a plant asset trade in with commercial substance implies that it alters the company's
 
 
 
 
 
 
 
 
 

38.
Plant assets should be recorded at cost, including all normal and reasonable expenditures necessary to get the asset in place and ready for intended use. This would include what costs?
 
 
39.
The process of allocating the cost of a natural resource to a period when it is consumed requires a debit entry to the
 
 
42.
Rojo's Roses received an invoice for replacement for the engine on its main delivery van. The replacement will extend the life of the van an additional 3 years. What is the entry to record this.
 
 
43.
Straight line depreciation is computed by
 
 
44.
To calculate the depletion expense during a period