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Exam 7: Plant Assets, natural Resources, Intangibles

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Question 101

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A plant asset is acquired by a business on January 1,2019,for $100,000.The asset's estimated residual value is $10,000 and its estimated life is 5 years.Management chooses to use straight-line depreciation. On January 1,2021,management revises the total useful life to 8 years since purchased and the residual value to $5,000. Required: 1.Compute the balance in Accumulated Depreciation on January 1,2021. 2.Compute the Depreciation Expense for the year ending December 31,2021. 3.Compute the balance in Accumulated Depreciation on December 31,2021. 4.Prepare the adjusting journal entry on December 31,2021 for the year.Omit the explanation.

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1.($100,000 - $10,000)÷ 5 = $1...

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Question 102

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The costs assigned to the Land account include legal fees,survey fees,and expenditures for grading and clearing the land.

A) True
B) False

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Question 103

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Auto Shop,Inc. ,incurred the following costs in acquiring plant assets: a.Purchased land with a $100,000 down payment and signed a $75,000 note payable for the balance. b.Delinquent property tax of $2,500 and legal fees of $1,000 had to be paid before the land could be purchased. c.$12,000 was paid to demolish an unwanted building on the land. d.Architect fee of $7,000 was paid for the design of a new office building. e.An office building was constructed at a cost of $500,000.A long-term note payable was used to pay for the cost. f.$17,500 was paid for fencing around the new building.$55,000 was paid for paving the parking lot by the new building. g.$20,000 was paid for lights in the new parking lot. h.$10,000 was paid for a sprinkler system for the bushes and grass. Required: Prepare journal entries for the above transactions.Explanations are not required.

Pat's Pets recently paid $15,000 to have the engine in its delivery van overhauled.The estimated useful life of the van was originally estimated to be 4 years.The overhaul is expected to extend the useful life of the van to 10 years.The overhaul is regarded as a(n) :

For each of the following,match the intangible asset with its definition.

Tom's Roadside Burger Stand has a beginning balance in the Accumulated Depreciation-Equipment account of $200,000.The depreciation expense on the equipment for the year was $50,000.At the end of the year,the balance in the Accumulated Depreciation-Equipment account was $140,000.What was the accumulated depreciation on the equipment sold during the year?

On January 1,2019,a machine has a remaining book value of $5,000.The residual value of the machine is $1,500.The company uses the double-declining-balance method of depreciation.If 2019 is the last year for depreciation,what is Depreciation Expense for the year ending December 31,2019?

The Accumulated Depreciation account is an income statement account.

On January 2,2019,Konrad Corporation acquired equipment for $500,000.The estimated life of the equipment is 5 years or 18,000 hours.The estimated residual value is $14,000.If Konrad Corporation uses the units of production method of depreciation,what will be the debit to Depreciation Expense for the year ended December 31,2020,assuming that during this period,the asset was used 6,000 hours?

Equipment with a historical cost of $100,000 and Accumulated Depreciation of $100,000 is junked.Which journal entry is necessary?

Beck Company trades in old equipment for new equipment.The old equipment has a cost of $10,000 and accumulated depreciation of $9,000.Beck Company pays cash of $21,000.The fair value of the new equipment is $28,000.What is the gain or loss for Beck Company on the exchange of equipment?

On January 4,2019,Mary's Cafe acquired equipment for $500,000.The estimated life of the equipment is 8 years or 60,000 hours.The estimated residual value is $40,000.What is the balance in the Accumulated Depreciation account at December 31,2020 if the straight-line method is used?

Carrie Heffernan Company purchased a delivery van on January 1,2019,for $50,000.The van was expected to remain in service 4 years (or 100,000 miles)and has a residual value of $5,000.The van traveled 30,000 miles the first year,25,000 miles the second year,and 22,500 miles in the third and fourth years. Required: 1.Prepare a schedule of depreciation expense per year for the first four years of the asset's life using the (a)straight-line method, (b)units-of-production method,and (c)double-declining-balance method. 2.Prepare a schedule of the book value of the van for each of the four years using the (a)straight-line method, (b)units-of-production method and (c)double-declining-balance method.

Samson Company has a machine with the following data: Is the machine impaired?