Plant Assets, Natural Resources, and Intangible Assets

According to the historical cost principle as applied to plant assets, what costs are included in the cost of a plant asset?

Merten Company purchases factory machinery at a cash price of $50,000. Related expenditures are for sales taxes $3,000, insurance during shipping $500, and installation and testing $1,000. What is the total cost of the factory machinery?

Which of the following are described as expenditures to maintain the operating efficiency and productive life of a plant asset?

What is the process of allocating to expense the cost of a plant asset over its useful life in a rational and systematic manner?

Which of the following factors are considered in computing depreciation?

Barb's Florists purchased a delivery truck for $13,000 with an expected salvage value of $1,000 and an estimated useful life of 5 years. Using the straight-line method, what is the annual depreciation expense?

Using the data for Barb's Florists' delivery truck (Cost $13,000, Salvage Value $1,000, useful life of 100,000 miles), what is the depreciation expense for the first year if the truck is driven 15,000 miles?

For Barb's Florists' truck (Cost $13,000, Salvage Value $1,000, 5-year life), what is the depreciation expense for the first year using the double-declining-balance method?

When a company revises an estimate for periodic depreciation, how should the change be accounted for?

What is the primary difference between depletion and depreciation?

Lane Coal Company invests $5 million in a mine estimated to have 1 million tons of coal and no salvage value. If Lane extracts and sells 250,000 tons in the first year, what is the entry to record depletion?

Which of the following is NOT a source of intangible assets?

How should the cost of an intangible asset with an indefinite life be treated?

Goodwill is recorded only when:

What is the asset turnover ratio used to analyze?

If a company sells an old asset and a new asset is acquired in an exchange, how is the cost of the new asset determined when the exchange has commercial substance?

A gain on the exchange of plant assets occurs when the:

Plant assets are distinguished from other assets by what three characteristics?

Which of the following would be recorded as a Land Improvement?

The materiality concept states that if an item would not make a difference in decision-making, a company:

Why is the book value of a plant asset not necessarily equal to its fair value?

An accelerated-depreciation method is one that:

If a company retires a fully depreciated plant asset that is still useful, how should it be reported on the balance sheet?

A company sells office furniture for $16,000 cash. The furniture originally cost $60,000 and had accumulated depreciation of $49,000 at the time of sale. What is the result of this transaction?

How are research and development (R&D) costs generally accounted for?

Which of the following would be amortized?

When an exchange of plant assets has commercial substance, a loss is recognized if:

Chisenhall Company purchased land and a building for $300,000. Management’s best estimate of the value of the land was $100,000 and the building $200,000. However, management told the accounting department to record the land at $220,000 and the building at $80,000. What is the likely motivation for this accounting treatment?

If a plant asset is retired before it is fully depreciated and no cash is received, what is the result?

Which depreciation method is most suitable for an asset whose productivity varies significantly from one period to another?

If a company revises the estimated useful life of a truck from 5 years to 6 years in its third year of use, the depreciation expense for the third year will be calculated based on the:

National Labs purchases a patent for $60,000. The legal life is 20 years, but National estimates the useful life to be only 8 years. What is the annual amortization expense?

What is the primary characteristic that distinguishes natural resources from other plant assets?

The asset turnover ratio for The Procter & Gamble Company in 2013 was 0.62 times. How is this ratio interpreted?

When an exchange of assets lacks commercial substance, how are gains and losses on the disposal of the old asset typically recognized?

Which of the following is an example of an intangible asset?

What is the book value of a plant asset?

Chambers Corporation purchased equipment for $36,000 with a 6-year life and $6,000 salvage value. At the end of year two, what is the accumulated depreciation using the straight-line method?

A company sells a machine for $21,000. The machine originally cost $80,000 and has been depreciated by $50,000. What is the result of the sale?

What is the term for the process of a plant asset becoming out of date before it physically wears out?

If a company sells an old asset with a book value of $12,000 and a fair value of $19,000, and receives cash of $3,000 in an exchange for a new asset, what is the cost of the new asset, assuming the exchange has commercial substance?

What is the primary objective of the asset turnover ratio?

Which of the following would NOT be capitalized as part of the cost of a delivery truck?

The process of allocating the cost of an intangible asset is referred to as:

Which of the following is a key difference between the straight-line and effective-interest methods of amortizing bond discount?

If a patent is purchased for $75,000 with an estimated useful life of 5 years and a legal life of 20 years, what is the journal entry to record annual amortization?

Which of the following assets is NOT depreciated?

When using the double-declining-balance method, depreciation stops when:

A company retires a piece of machinery that cost $62,000 and was fully depreciated. How is this transaction recorded?

What is the proper balance sheet presentation for a machine with a cost of $48,000,000 and accumulated depreciation of $5,000,000?