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Exam 9: Plant Assets, Natural Resources, and Intangibles

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Question 21

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On July 14, Jones Sporting Goods sold equipment that originally cost $50,000. After updating depreciation, the Accumulated Depreciation - Equipment had a normal balance of $44,000. The selling price of the equipment was $42,000. Jones will report a loss of $8,000.

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Question 22

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The intellectual property of a business is easy to measure.

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Question 23

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When a plant asset is sold for less than its book value, a gain is recorded.

Classify each of the following expenditures :

Geller Electronics 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. Journalize the acquisition of Tabletz in the books of Geller Electronics. Omit explanation.

Gulfcoast, Inc. purchased a van on January 1, 2019, for $930,000. Estimated life of the van was five years, and its estimated residual value was $93,000. Gulfcoast uses the straight-line method of depreciation. Calculate the book value of the van at the end of 2019.

Gain or loss is determined by comparing the cash received and the market value of any other asset received with the historical cost of the asset disposed of.

Brandy Enterprises discarded a computer that was fully depreciated and had no residual value. As a result of this transaction, Brandy will _________.

The double-declining-balance method is an accelerated method of depreciation.

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

Ordinary repairs to plant assets are referred to as revenue expenditures.

If a company uses the contra account, Accumulated Amortization, this account is typically shown on the balance sheet.

When a business uses the straight-line method of depreciation, the amount of depreciation is reduced from year to year.

A coal mine cost $1,003,000 and is estimated to hold 54,000 tons of coal. There is no residual value. During the first year of operations, 11,000 tons are extracted and sold. Calculate depletion expense for the first year. (Round any intermediate calculations to the nearest cent.)

The process of allocating the cost of a plant asset over its useful life is known as cost reduction.

On January 1, 2019, Sapphire Manufacturing Corporation purchased a machine for $40,000,000. The corporation expects to use the machine for 24,000 hours over the next six years. The estimated residual value of the machine at the end of the sixth year is $40,000. The schedule of usage of the machine is below. $\begin{array} { | c | c | } \hline \text { Year } & \text { Usage } \\\hline 1 & 4,500 \\\hline 2 & 6,000 \\\hline 3 & 5,200 \\\hline 4 & 4,300 \\\hline 5 & 2,000 \\\hline 6 & 2,000 \\\hline\end{array}$ Prepare the depreciation schedule using the units-of-production method of depreciation.

If an asset is discarded when it is fully depreciated and has no residual value, the business does not need to make a journal entry because the book value is zero.

The asset turnover ratio measures ________.

On June 30, 2018, Staton Island, Inc. discarded equipment costing $40,000. Accumulated Depreciation as of December 31, 2017, was $25,000. Assume annual depreciation on the equipment is $2,500. Prepare the journal entries for the 2018 depreciation expense and for the disposal of the equipment. Omit explanation.

Prepare the journal entry to record the acquisition of fences and signs for $5,000 cash. Omit explanation.