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Exam 18: Property, Plant, and Equipment

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Question 41

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If the property used in a business has physical substance and is not real estate it is _____________ property.

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Question 42

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Accelerated depreciation methods allocate greater amounts of depreciation expense to an asset's early years of useful life and thus provides an investment incentive to businesses to take this non-cash deduction and reduce current period income taxes.

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Question 43

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Trade-ins are treated as sales of assets for accounting purposes.Explain the difference in treatment when the trade-in of an asset results in a gain and the treatment when the trade-in of an asset results in a loss.

In 2016 Lucky Mining Company paid $800,000 for mining rights.It is estimated that a total of 400,000 kilograms of ore are available to be extracted.During 2016,60,000 kilograms of ore were mined.What is the amount of Depletion Expense recorded in the adjusting entry for 2016?

The book value of an asset is usually the same as the fair market value of the asset.

A company uses the units-of-output method of computing depreciation on its fleet of cars.A car that costs $37,000 is expected to have a useful life of 120,000 miles and an expected salvage value of $1,000 at the end of its useful life.The rate for each mile is ___________________.

Accumulated Depreciation is classified as a contra asset account.

Book Value is the asset's price in the open market.

Assume that a business trades in an old cash register for a new one.Under the income tax method,

An asset that cost $14,000 was sold for $9,000 cash.Accumulated depreciation on the asset was $7,000.The entry to record this transaction includes the recognition of

Interest costs incurred during the construction of a long-term asset are capitalized as part of the asset cost along with permits fees,insurance and measurable direct overhead considered reasonable and necessary during the construction period.

On,January 2,2013,Rubble Sand and Gravel Company purchased equipment for $77,000.The equipment was to be used for five years and had a $2,000 estimated residual value. On January 2,2016,equipment was sold for $30,000.Record the transactions on page 9 of a general journal.Omit descriptions.

The acquisition cost of an intangible asset should be charged to expense over the shorter of its legal or useful life.

For financial accounting purposes,when an asset is traded in for a similar asset,a gain is reported if the trade-in allowance exceeds the book value of the asset traded in.

A firm purchases an asset for $50,000 and estimates that it will have a useful life of five years and a salvage value of $5,000.Under the double-declining-balance method,the depreciation expense for the first year of the asset's useful life is

When an asset is traded for a similar asset,if the trade-in allowed is less than the book value of the asset,the loss is not recognized for financial accounting purposes.

On January 2,2016,the Unit Manufacturing Company purchased manufacturing equipment for $62,000.The equipment is expected to have a useful life of six years and a salvage value of $2,000.Prepare a schedule showing the annual depreciation for each of the first three years of the asset's life under the straight-line method,the double-declining-balance method,and the sum-of-the-years'-digits method.

On January 2,2016,the Hanover Company purchased some office equipment for $20,000.The equipment is expected to have a useful life of five years and a salvage value of $2,000.Prepare a schedule showing the annual depreciation for each of the first three years of the asset's life under the straight-line method,the double-declining-balance method,and the sum-of-the-years'-digits method.

Unlike tangible personal property,real property is not depreciated.

The steps in the process of determining an impairment loss in their proper order are