ACCT 301 Smartbook Chapter 10 Property, Plant, and Equipment and Intangible Assets solutions answers

ACCT 301 Smartbook Chapter 10 Property, Plant, and Equipment and Intangible Assets Acquisition solutions complete answers 

 

Long-term assets are typically classified in one of these two categories:

 

True or false: The initial cost of property, plant, and equipment includes the purchase price and all expenditures necessary to bring the asset to its desired condition and location for use.

 

Indicate which costs would be capitalized as part of the cost of manufacturing equipment. (Select all that apply.)

 

Expenditures needed to get land ready for its intended use should be:

 

Accounting for land improvements requires that the land improvements are capitalized and then        over periods benefited by their use. (Enter only one word.)

 

From a financial reporting perspective, property, plant, and equipment and intangible assets exhibit the following characteristics (Select all that apply.)

 

Which of the following costs should be capitalized in the costs of acquiring a building? (Select all that apply.)

 

The purchase price and all costs to bring an asset to its desired condition and location for use should be ______.

 

Which of the following are classified as natural resources? (Select all that apply.)

 

Which of the following items should be capitalized in the cost of equipment? (Select all that apply.)

 

Expenditures relating to a search for natural resources are referred to as

 

Sarah purchases land to be used for a new storage facility. Which of the following items are capitalized in the cost of land? (Select all that apply.)

 

Accounting for land improvements requires that the costs of land improvements are (Select all that apply.)

 

Obligations associated with the disposition of property, plant, equipment, and natural resources are called               obligations. (Enter one word per blank.)

 

Which of the following should be included in the cost of buildings?

 

An asset, other than financial assets, that has no physical substance is called a(n)        asset. (Enter only one word.)

 

Berner Mining Company estimates that after it completes extraction of valuable metals from a tract of land, $245,000 will be necessary to return the land to its original condition. This cost is considered a(n)

 

A(n) ______ is protected by law and gives the creator of a published work the exclusive rights to reproduce and sell the work for the life of the creator plus 70 years.

 

Manfred Mining Company is required to restore a piece of land to its original condition after it completes extraction of precious metals. From a financial reporting perspective, the related obligation is referred to as an asset

 

A(n)        is the exclusive right to manufacture a product or use a process granted for a period of        years. (Enter one word per blank.)

 

Which of the following items are intangible assets? (Select all that apply.)

 

A(n)        is an exclusive right of protection given to a creator of a published work, such as a song, film, painting, photograph, or book. (Enter only one word.)

 

Norbert Company has an exclusive right to display a specific symbol and routinely uses it on its promotional materials, company letterhead, and other media to distinguish its company from other firms. This right is referred to as a

 

Larry purchases land to be used for a new corporate headquarters. Which of the following items are capitalized in the cost of land? (Select all that apply.)

 

When assets are purchased in a group for a single sum, it is referred to as a

 

The exclusive legal right to manufacture a product or to use a process is called a(n)       . (Enter only one word.)

 

When assets are acquired in a noncash transaction, if the fair value of the noncash items given is not clearly evident, then the ______ value of the assets received is used to record the assets.

 

A company acquires equipment by signing an interest-bearing note payable for $20,000. The interest rate is realistic so the company will record (Select all that apply.)

 

An asset, other than financial assets, that has no physical substance is referred to as a(n)

 

A(n)         is an exclusive right to display a word, slogan, symbol, or emblem that distinctively identifies a company, product, or service. (Select all that apply.)

 

A company issues its equity securities to purchase land. The common stock is publicly traded, and both the value of the stock and the land is known. The best indicator of fair value is the value of the

 

Margot Company purchases land, building and equipment for a single purchase price. Margot should account for the purchase as a ______ purchase.

 

When a company receives an asset from an unrelated party by a donation, the assets are valued at fair value and

 

When a company acquires assets by issuing debt or equity securities, the first indicator of fair value is the

 

The basic principle for valuing assets in a nonmonetary exchange is to value the asset received at

 

A company acquires equipment by signing an interest-bearing note payable. If the interest rate is realistic, the company will record the equipment at the

 

An asset is exchanged for another asset and no cash is exchanged in the transaction. The fair value of the assets are not determinable. At what amount should the new asset be recorded?

 

A nonmonetary exchange is considered to have        substance if the future cash flows will change as a result of the exchange. (Enter only one word.)

 

A company issues its equity securities to purchase land. The common stock is not publicly traded. The best indicator of fair value is the

 

The two important accounting issues related to self-constructed assets are

 

When a company receives an asset from an unrelated party by a donation, the assets are valued at        value. (Enter only one word.)

 

The FASB requires research and development costs to be expensed because

 

Which of the following is true regarding a nonmonetary exchange of assets?

 

Which method in oil and gas accounting requires the cost of unsuccessful wells be expensed in the current period?

 

An asset is exchanged for another asset and cash is received in the transaction. The fair value of the assets are not determinable. At what amount should the new asset be recorded?

 

A nonmonetary exchange has commercial substance if the ______ will change as a result of the exchange.

 

Because it is difficult to estimate the future value of research and development, FASB requires that research and development costs be treated as

 

The two generally accepted methods for oil and gas accounting for U.S. GAAP are the

 

 

______ ______ are physically diminished as minerals and other materials are extracted from the ground and are sold or used in the production process, whereas equipment, land, and buildings have physical characteristics that remain unchanged.               

Obligations associated with disposition of property, plant, equipment, or natural resources are called            

Which of the following items should always be capitalized in the cost of equipment? (Select all that apply.)               

Superior mining Inc. purchases a large piece of land with rich mineral deposits and plans to start extracting the mineral-rich ore immediately. The cost of the piece of land should be reported in this category:                  

Which method in oil and gas accounting allows all costs to be capitalized as assets, and then expensed in the future as oil and gas are extracted?             

 

 

The allocation of a natural resource to the periods extracted is referred to as            

The allocation of the cost of natural resources to the periods extracted is referred to as __________ expense.              

An asset retirement obligation must be recognized               

Asset retirement obligations are recorded as a liability and measured at                  

Ayesha Corp. purchases equipment to be used in manufacturing. Given the following expenditures during the year, calculate the amount capitalized as the cost of equipment.               

Clarion purchases land and prepares it for use. Which of the following items should be capitalized as land improvements? (Select all that apply.)            

Collin Corp. purchases equipment to be used in manufacturing. Given the following expenditures during the year, calculate the amount capitalized as the cost of equipment.               

A company acquires a mine and incurs costs such as expenditures to build tunnels and shafts before production may begin. These expenditures are classified as                

The cost of a major improvement that extends the useful life of an asset would be ______; the cost of maintenance that does not increase the future benefits would be ______.               

The cost of natural resources includes what three costs?                  

The costs included in the natural resource account includes (Select all that apply.)                

Costs of an asset that produce future benefits are ______, but costs that produce benefits only in the current period are ______.                

Depreciation expense is recorded for tangible fixed assets, whereas ______ expense is recorded for natural resources.                   

The difference between an asset retirement liability and the probability weighted expected cash flows is recognized as ______ expense each period.           

GeoMines Corp. has the following costs related to a mine it acquired this year.

What amount should be included as an asset for natural resources?             

How does a company measure an asset retirement obligation?          

If the asset retirement obligation does not equal the restoration costs at the end of an asset's life, how is this difference disclosed?             

Land, building, machinery, furniture, and equipment are typically are reported as part of:                 

Marlin purchases land and the rights to explore for $200,000. The estimated cost of restoration, calculated as the present value of expected cash outflows, is $40,000. The journal entry to record the acquisition of the mine will include which of the following entries?          

Mega Mines acquires a new mine for $1,000,000. Mega Mines determines at the date of acquisition that it will cost $140,000 to restore the land when the mining process is complete in 5 years. Mega Mines has a legal obligation to remove the equipment upon completion of the mining activities. Which of the following are acceptable choices for determining when to recognize an asset retirement obligation? (Select all that apply.)            

Mining Ventures purchases land and the rights to explore for $100,000. Exploration costs are $20,000, and development costs are $30,000. The estimated cost of restoration, calculated as the present value of expected cash outflows, is $50,000. The journal entry to record the acquisition of the mine will include what entries?           

Mining Ventures purchases land and the rights to explore for $100,000. Exploration costs are $20,000, and development costs are $30,000. The estimated cost of restoration, calculated as the present value of expected cash outflows, is $50,000. The journal entry to record the acquisition of the mine will include which entries?                   

Polly Corporation purchases land for $200,000. Polly incurs the following costs associated with the land acquisition:

What is the amount that Polly should capitalize in the land account?             

Quarry Corp. has the following costs related to a mine it acquired this year.

What amount should be included as an asset for natural resources?             

Sherman Corporation purchases land for $100,000. Sherman incurs the following costs associated with the land acquisition:

What is the cost that Sherman should capitalize in the cost of land?             

True or false: Asset retirement obligations (AROs) arise only from legal obligations associated with the retirement of a long-lived tangible asset.               

True or false: Losses on asset retirement obligations are recorded if actual restoration costs are higher than the estimated liability; however, gains on asset retirement obligations are not allowed.               

What amount is used to measure the fair value of an asset retirement obligation?                

When calculating the fair value of an asset retirement obligation, what rate is used to calculate the expected cash flows?            

When is it appropriate to recognize a liability for an asset retirement obligation? (Select all that apply.)                    

When the expected cash flow approach is used to measure an asset retirement obligation at fair value, what assumptions or estimates must be made by the accountant? (Select all that apply.)               

Which of the following are noncurrent tangible assets? (Select all that apply.)            

 

 

The costs incurred after a natural resource has been discovered but before production begins are referred to as               

The costs to return land or other property to its original condition after extracting natural resources are referred to as                 

The distinction between land and land improvements is that:            

donated assets should be recorded on the balance sheet at what amount?               

which of the following are intangible assets?