Plant Assets, Natural Resources, and Intangible Assets

Which of the following is NOT a characteristic of a plant asset?

McCoy Company purchased land for a plant site. Which of the following expenditures should NOT be included in the cost of the land?

Hayes Company acquires real estate for $100,000 cash. The property has an old warehouse that is razed at a net cost of $6,000. Additionally, Hayes pays an attorney's fee of $1,000 and a real estate broker's commission of $8,000. What is the total cost of the land?

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

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

Under the double-declining-balance method, what is the depreciation expense for Barb's Florists' truck in the first year, assuming a cost of $13,000, a 5-year life, and a $1,000 salvage value?

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

When a company changes an estimate for depreciation, how should the change be handled?

Hobart Company retires its fully depreciated computer printers, which originally cost $32,000. What is the journal entry to record this retirement?

Wright 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 disposal?

The allocation of the cost of natural resources to expense in a rational and systematic manner over the resource's useful life is known as:

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

Research and development (R&D) costs are:

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

Goodwill is recorded only when:

What is the formula for the asset turnover ratio?

In an exchange of plant assets that has commercial substance, a loss on disposal is computed as the:

An expenditure that increases the operating efficiency, productive capacity, or useful life of a plant asset is referred to as a(n):

Iron Mountain Ski Corporation purchased a snow-grooming machine for $50,000. It is estimated to have a 10-year life with a $2,000 salvage value. What is the annual depreciation expense using the straight-line method?

The book value of a plant asset is the difference between the:

Which of the following assets is NOT subject to depreciation?

The legal life of a patent is:

Overland Trucking sells a truck for $10,000 cash. The truck cost $30,000 and had accumulated depreciation of $16,000. The journal entry to record this sale would include a:

The declining-balance method of depreciation is considered an accelerated-depreciation method because it:

If a company retires a plant asset that is not yet fully depreciated and receives no cash for it, the company records:

An impairment of a plant asset is:

Lane Coal Company invests $5 million in a mine estimated to have 1 million tons of coal and no salvage value. In the first year, 250,000 tons are extracted. What is the depletion expense for the first year?

National Labs purchases a patent for $60,000 and estimates its useful life to be eight years. The patent's legal life is 20 years. What is the annual amortization expense?

What is the primary purpose of the asset turnover ratio?

In an exchange of plant assets with commercial substance, how is the cost of the new asset determined?

Which of the following is considered a capital expenditure?

If a plant asset is still useful after it has been fully depreciated, the company should:

Chambers Corporation purchased equipment for $36,000, with an estimated 6-year life and $6,000 salvage value. At the end of year three, the company revises the total life to 10 years and the salvage value to $2,000. What is the revised annual depreciation?

The exclusive right to reproduce and sell an artistic or published work is a:

Depreciation is a process of valuation, not cost allocation.

An intangible asset with an indefinite life should be:

A company purchases a new machine for $80,000. It pays $5,000 for shipping and $2,000 for installation. The company also pays $3,000 for a one-year insurance policy on the machine. What is the total cost of the machine to be capitalized?

If Paramour Company has net sales of $420,000, beginning total assets of $460,000, and ending total assets of $540,000, what is its asset turnover?

A company exchanges a used truck plus $17,000 cash for a new semi-truck. The used truck has a book value of $42,000 (cost $64,000 less $22,000 accumulated depreciation) and a fair value of $26,000. The exchange has commercial substance. The company should record:

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

What is the book value of a plant asset?

A company purchases a machine for $20,000 with an estimated 4-year life and a $4,000 salvage value. After two years of straight-line depreciation, what is the machine's book value?

An intangible asset is defined by all the following characteristics EXCEPT:

Pryce Company owns equipment that cost $65,000 with a $5,000 salvage value and a 5-year life. It has been depreciated for 2 full years using the straight-line method. If Pryce sells the equipment for $31,000, what is the result?

The materiality concept in accounting for plant assets means that:

Which of the following would NOT be included in the cost of a building?

A contra asset account is used for which of the following?

Paramour Company reported net sales of $420,000. Its total assets were $460,000 at the beginning of the year and $540,000 at the end of the year. What is the asset turnover for the year?

An exchange of plant assets is said to have commercial substance if:

Mark Express exchanges old delivery equipment plus $3,000 cash for new equipment. The old equipment has a book value of $12,000 and a fair value of $19,000. The exchange has commercial substance. At what amount should the new equipment be recorded?