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Exam 10: Plant Assets, natural Resources, and Intangibles

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Question 1

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On January 1,2017,Ellis,Inc.purchased a patent for $200,000 cash.Although the patent gives legal protection for 20 years,the patent is expected to be used for only 10 years.Journalize the amortization expense for 2017.Assume straight-line amortization.

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Explanation:
Amortization exp...

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Question 2

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On January 1,2017,Real Planes 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.What is the book value of the machine at the end of year 2018 if the corporation uses double-declining-balance method of depreciation? (Round your intermediate calculations. )

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Double-declining-balance depreciation = ...

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Question 3

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

The units-of-production method is used to compute depletion expense.

Acer,Inc.plans to develop a shopping center.In the first quarter,the following amounts were spent: What amount should be recorded as the cost of the land in the corporation's books?

A business,which has a calendar year accounting period,purchased an asset on March 1,2016.The business disposed of the asset on August 31,2017.For the calendar year 2017,depreciation should be calculated from January 1 to August 31.

All intangible assets must be amortized each year.

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

For exchanges of plant assets with commercial substance,the new asset received will be recorded at its market value.

When a business sells a plant asset for book value,a gain or loss should be recorded.

The expected cash value of an asset at the end of its useful life is known as ________.

The type of intangible asset related to the exclusive right to reproduce and sell a book or intellectual property is a ________.

If an asset is disposed of 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.

Which of the following statements,regarding the reporting of intangible assets,is correct?

Roggers Corp.'s beginning and ending total assets in the year 2017 were $19,000,000 and $23,000,000,respectively.Its asset turnover ratio for the year was calculated to be 1.6 times.Calculate the amount of net sales for the year 2017.

Equipment was purchased for $24,000 on January 1,2016.The equipment's estimated useful life was five years,and its residual value was $4,000.The straight-line method of depreciation was used.Calculate the gain or loss on sale if the equipment is sold for $18,000 on December 31,2016,the end of the accounting period.Prepare the journal entry to record the sale of equipment.

A coal mine cost $1,000,000 and is estimated to hold 52,000 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. )

Which of the following is an intangible asset?

Plant assets are long-lived,tangible assets used in the operation of a business.

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