FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 11: Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

Multiple Choice

Review LaterAdd Note

Review Later

A change in the estimated useful life and residual value of machinery in the current year is handled as:

A) A retrospective change back to the date of acquisition as though the current estimated life and residual value had been used all along.
B) A prospective change from the current year through the remainder of its useful life, using the new estimates.
C) A cumulative adjustment to income in the current year for the difference in depreciation under the new versus old estimates.
D) All of these answer choices are incorrect.

Correct Answer

verified

Show Answer

Question 2

True/False

Review LaterAdd Note

Review Later

Biological assets are valued at fair value less estimated costs to sell under International Financial Reporting Standards (IFRS).

Correct Answer

verified

True

Question 3

Essay

Review LaterAdd Note

On April 1, 2018, Parks Co. purchased machinery at a cost of $42,000. The machinery is expected to last 10 years and to have a residual value of $6,000. -Compute depreciation for 2018 and 2019 and the book value of the machinery at December 31, 2018 and 2019, assuming double-declining balance method is used.

El Dorado Foods Inc. owns a chain of specialty stores in the Pacific Northwest. Recently, four of the stores have experienced declining profits due to market saturation in the area. As a result, management gathered data about possible impairment of the assets of the stores. The information gathered was as follows: Book value: $17.5 million Fair value: $14.9 million Undiscounted sum of future cash flows: $16.5 million -Required: Determine the amount, if any, of the impairment loss that El Dorado must recognize on these assets.

On January 1, 2018, Morrow Inc. purchased a spooler at a cost of $40,000. The equipment is expected to last eight years and have a residual value of $4,000. During its eight-year life, the equipment is expected to produce 250,000 units of product. In 2018 and 2019, 42,000 and 76,000 units respectively were produced. -Required: Compute depreciation for 2018 and 2019 and the book value of the spooler at December 31, 2018 and 2019, assuming the straight-line method is used.

Cutter Enterprises purchased equipment for $72,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $6,000. - Using the double-declining balance method, depreciation for 2018 and the book value at December 31, 2018, would be:

Synthetic Fuels Corporation prepares its financial statements according to IFRS. On June 30, 2018, the company purchased equipment for $350,000. The equipment is expected to have a seven-year useful life with no residual value. Synthetic uses the straight-line depreciation method for all depreciable assets. On December 31, 2018, the end of the company's fiscal year, Synthetic chooses to revalue the machinery to its fair value of $299,000. Required: 1. Calculate depreciation for 2018. 2. Prepare the journal entry at the end of 2018 to record the revaluation of the equipment. 3. Calculate depreciation for 2019. 4. Repeat requirement 2 assuming that the fair value of the equipment at the end of 2018 is $338,000.

In its 2018 annual report to shareholders, Custard Cup Inc. included the following note: Note 4 Property, Plant, and Equipment Property, plant, and equipment (PPE) at December 31, 2018, and December 31, 2017, consisted of the following: Depreciation expense for property, plant and equipment was $26 million in 2018. Required: Compute the Accumulated depreciation on PPE disposed of by Custard Cup during 2018.

Listed below are 10 terms followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. -Amortization

Listed below are five terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term. -Percentage depletion

Assuming an asset is used evenly over a four-year service life, which method of depreciation will always result in the largest amount of depreciation in the first year?

Cutter Enterprises purchased equipment for $72,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $6,000. - Using the sum-of-the-years'-digits method, depreciation for 2019 and book value at December 31, 2019, would be:

Briefly explain the following statement. Depreciation is a process of cost allocation, not valuation.

Canliss Mining uses the retirement method to determine depreciation on its office equipment. During 2016, its first year of operations, office equipment was purchased at a cost of $14,000. Useful life of the equipment averages four years and no salvage value is anticipated. In 2018, equipment costing $5,000 was sold for $600 and replaced with new equipment costing $6,000. Canliss would record 2018 depreciation of:

Under group and composite depreciation methods, gains and losses on the disposal of individual assets need not be computed.

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Rearrangements

Listed below are 10 terms followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. -Double-declining balance

Briefly discuss why straight-line is the most common depreciation method used in practice.

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Accelerated methods

Adding a refrigeration unit to a delivery truck that previously did not have this capability is an example of: