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Exam 9: Plant Assets, natural Resources, and Intangibles

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Question 91

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Danube Corp.purchased a used machine for $17,000.The machine required installation costs of $7,000 and insurance while in transit of $600.At which of the following amounts would the be recorded? $\text { machine }$

A) $17,000
B) $24,000
C) $17,600
D) $24,600

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Question 92

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

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Question 93

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During 2017,Sanchez Corp.had net sales of $16,400,000.The beginning total assets were $8,900,000.The asset turnover ratio was 1.7 times.Calculate the ending total assets of Sanchez.

An asset is considered to be obsolete when a newer asset can perform the job more efficiently.

Fleetwood Corp.purchased a mine in 2016 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 2016.How will the mine be reported on the balance sheet at the end of year 2016? (Round all intermediate calculations to the nearest cent. )

Ivorycoast,Inc.purchased a van on January 1,2017,for $880,000.Estimated life of the van was five years,and its estimated residual value was $101,000.Ivorycoast uses the straight-line method of depreciation.Calculate the book value of the van at the end of 2017.

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

Which of the following is included in the cost of land?

The cost of land does not include the cost of fencing and paving.

Which of the following is the correct accounting treatment for a patent?

Houlihan,Inc.purchased a van on January 1,2016,for $800,000.Estimated life of the van was five years,and its estimated residual value was $90,000.Houlihan uses the straight-line method of depreciation.Give the journal entry to record the depreciation expense for 2016 on the van.

Intangible assets ________.

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

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

Land and land improvements are one and the same and therefore must be recorded in single account.

A truck was acquired for $100,000 and has accumulated depreciation of $70,000.The business exchanges the truck for a new one.The new truck has a market value of $120,000 and the business pays $100,000 cash.Assume the exchange has commercial substance.Prepare the journal entry to record this transaction.

On January 1,2017,Doyle 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 corporation used the machine for 3,600 hours in 2017 and 5,000 hours in 2018.Calculate depreciation expense for 2018 if the company uses the units-of-production method of depreciation.

Residual value is also known as depreciable cost.

If a business changes the estimated useful life,or estimated residual value,of a plant asset,depreciation expense must be recalculated.

Solutions paid $200,000 to acquire Fancy Phones,Inc. ,an electronic gadget-advertising website.At the time of the acquisition,Fancy Phone's balance sheet reported total assets of $200,000 and liabilities of $100,000.The fair market value of Fancy Phone's assets was $200,000.The fair market value of its liabilities was $100,000.At the end of 2018,goodwill was measured,and its fair value was determined to be $60,000.Record the impairment of goodwill.