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Exam 9: Plant Assets, Natural Resources and Intangible Assets

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Question 111

Multiple Choice

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Which of the following assets does not decline in service potential over the course of its useful life?

A) Equipment
B) Furnishings
C) Land
D) Fixtures

E) B) and C)
F) A) and C)

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Question 112

True/False

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Natural resources include standing timber and underground deposits of oil, gas, and minerals.

A) True
B) False

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Question 113

Multiple Choice

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Useful life is expressed in terms of use expected from the asset under the

The balances of the major classes of plant assets and accumulated depreciation by major classes should be disclosed in the balance sheet or notes the financial statements.

Mott Company uses the units-of-activity method in computing depreciation.A new plant asset is purchased for $48,000 that will produce an estimated 100,000 units over its useful Life.The estimated salvage value at the end of its useful life is $4,000.What is the depreciation cost per unit?

Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as

Goodwill is not recognized in accounting unless it is acquired from purchasing another business enterprise.

Equipment with a cost of $400,000 has an estimated salvage value of $25,000 and an estimated life of four years or 15,000 hours.It is to be depreciated using the units-of-activity method.What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours?

To qualify as natural resources in the accounting sense, assets must be

If a plant asset is retired before it is fully depreciated and no salvage or scrap value is received,

Don's Copy Shop bought equipment for $450,000 on January 1, 2020.Don estimated the useful life to be three years with no salvage value, and the straight-line method of depreciation will be used.On January 1, 2021, Don decides that the business will use the equipment for a total of five years.What is the revised depreciation expense for 2021?

Moreno Company purchased equipment for $900,000 on January 1, 2020, and will use the double-declining-balance method of depreciation.It is estimated that the equipment will have a 3-year life and a $40,000 salvage value at the end of its useful life.The amount of depreciation expense recognized in the year 2022 will be

All of the following are intangible assets except

Equipment was purchased for $85,000 on January 1, 2021.Freight charges amounted to $3,500 and there was a cost of $10,000 to build a foundation and install the equipment.It is estimated that the equipment will have a $15,000 salvage value at the end of its 5-year useful life.What is the amount of accumulated depreciation at December 31, 2022, if the straight-line method of depreciation is used?

Nicklaus Company has decided to sell one of its old machines on June 30, 2021.The machine was purchased for $200,000 on January 1, 2017, and was depreciated on a straight-line basis for 10 years with no salvage value.If the machine was sold for $65,000, what was the amount of the gain or loss recorded at the time of the sale?

Depletion expense is reported in the income statement as an operating expense.

The Accumulated Depletion account is deducted from the cost of the natural resource in the balance sheet.

Research and development costs

Sargent Corporation bought equipment on January 1, 2021.The equipment cost $360,000 and had an expected salvage value of $60,000.The life of the equipment was estimated to be six years.Assuming straight-line deprecation, the book value of the equipment at the beginning of the third year would be

A patent should