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Exam 10: Property,plant and Equipment,and Intangibles

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Question 41

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Great Coast Construction (GCC)exchanged a three-year-old excavator for a new excavator that had a list price of $63,000,which was its fair value.The old excavator originally cost $85,000 and has accumulated depreciation of $45,000 to the date of exchange.In addition to the $45,000 trade-in given for the old excavator,GCC paid $8,000 cash to complete the deal.

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Question 42

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Impairment can result from a variety of situations that include a significant decline in an asset's market value or a major adverse effect caused by technological,economic,or legal factors.

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Question 43

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Aye Company's computer was destroyed by fire.The computer originally cost $5,000,and accumulated depreciation to the date of the fire was $900.The company received $2,000 from an insurance policy that covered the computer and will use that money to help pay for a new computer.Prepare the general journal entry to record the loss of the computer and the receipt of cash from the insurance company.

SportsWorld paid $140,000 for a property.The property included land appraised at $67,500,land improvements appraised at $25,000,and a building appraised at $55,500.What should be the allocation of costs in the accounting records (round calculations to 3 decimals) ?

A depreciation method that produces larger depreciation charges during the early years of an asset's life and smaller charges in the later years is:

Xeno Co.incurred the following transactions concerning its machinery: Xeno Co uses the calendar year as its fiscal year. Prepare the journal entry to record depreciation expense for 2014. Prepare the journal entry to record depreciation expense for 2015. Prepare the journal entry to record depreciation expense for 2016. Round all values to the nearest dollar.

Sports Med sold an X-ray machine that originally cost $100,000 for $60,000.The accumulated depreciation on the machine to the date of sale was $40,000.On this sale,Sports Med should recognize:

Depreciation:

The useful life of a property,plant and equipment asset is:

Great Coast Construction (GCC)exchanged a three-year-old excavator for a new excavator that had a list price of $160,000.The old excavator originally cost $175,000 and had accumulated depreciation of $45,000 to the date of exchange.In addition to the $145,000 trade-in given for the old excavator (which was the old asset's fair value),GCC paid $10,000 cash to complete the deal.The list price for the new excavator is considered unreliable. Record the asset exchange.

When the cost of the asset changes because of a subsequent capital expenditure,revised depreciation for current and future periods must be calculated and adjusted.

An accelerated depreciation method yields smaller depreciation expense in the early years of an asset's life and larger charges in later years.

A new machine is expected to produce 60,000 units of product during its 5-year life.The machine cost $180,000 and is estimated to have a $20,000 residual value. If the machine produces 7,200 units of product during its first year,what is the depreciation for the year calculated by the units-of-production method (round rate to 2 decimals)?

Hertzog Company purchased and installed a machine on February 1,2014,at a total cost of $72,000.Straight-line depreciation was calculated based on the assumption of a five-year life and no residual value.The machine was disposed of on July 31,2017. Assuming the machine was sold for $22,000,prepare the general journal entry to record the disposal

Goodwill is an intangible asset.

The units of production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

Because depreciation is based on predictions of residual value and useful life,depreciation is an estimate.

Non-current assets can be divided into two groups including tangible and intangible assets.These assets are generally used in operations of a business and have useful lives extending over more than one accounting period.

On January 1,2014,a machine costing $230,000 with a 4-year service life and an estimated $3,000 residual value was purchased.It was also estimated that the machine would produce 50,000 units during its life.The actual units produced during its first 2 years of operation were 9,000 and 10,000 respectively.Calculate the amount of depreciation expense for calendar years 2014 and 2015 under each of the following assumptions: (a)The company uses the straight-line method of depreciation. (b)The company uses the units-of-production method of depreciation. (c)The company uses the double-declining-balance method of depreciation.

Property,plant and equipment are: