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Exam 10: Plant Assets Natural Resoures and Intangibles

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Question 81

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A company purchased a cooling system on January 2 for $225,000. The system had an estimated useful life of 15 years. After using the system for 13 full years, the company completed a renovation of the system at a cost of $33,000 and now expects the system to be more efficient and last 8 years beyond the original estimate. The company uses the straight-line method of depreciation. (a) Prepare the journal entry at January 3, to record the renovation of the cooling system. (b) Prepare the journal entry at December 31, to record the revised depreciation for the thirteenth year.

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Question 82

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On January 1, Year 1, Naples purchased a computer system that cost $1,480,000. The estimated useful life of the computer is 3 years and salvage value is $40,000. Straight-line depreciation is to be used. On January 1, Year 2, Naples determined that the estimated useful life of the computer would be 4 years instead of 3 years. The estimated salvage value will only be $10,000. Prepare the journal entry to record depreciation expense for Year 1. Prepare the journal entry to record depreciation expense for Year 2.

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Question 83

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A company's property records revealed the following information about one of its plant assets: $\begin{array} { | c | l | c | l | l | } \hline \text { Cost } & \begin{array} { l } \text { Salvage } \\\text { Value }\end{array} & \begin{array} { l } \text { Purchase } \\\text { Date }\end{array} & \begin{array} { l } \text { Estimated } \\\text { Life }\end{array} & \text { Depreciation Method } \\\hline \$ 450,000 & \$ 30,000 & 10 / 01 & 7 \text { years } & \text { Straight-line } \\\hline\end{array}$ Calculate the depreciation expense for the asset in Year 1 and Year 2 for the year ended December 31. Year 1______________________ Year 2 _______________________

Beckman Enterprises purchased a depreciable asset on October 1, Year 1 at a cost of $100,000. The asset is expected to have a salvage value of $20,000 at the end of its five-year useful life. If the asset is depreciated on the double-declining-balance method, the asset's book value on December 31, Year 2 will be:

A company had a tractor destroyed by fire. The tractor originally cost $85,000 with accumulated depreciation of $60,000. The proceeds from the insurance company were $20,000. The company should recognize:

If land is purchased as a building site, the cost of removing existing structures is not charged to the Land account.

A __________results from revising estimates of the useful life or salvage value of a plant asset.

Salvage value is:

Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $87,000. The machine's useful life is estimated to be 5 years, or 400,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units of product - Determine the machines' second year depreciation under the straight-line method.

The term inadequacy, as it relates to the useful life of an asset, refers to:

The useful life of a plant asset is:

Granite Company purchased a machine costing $120,000, terms 1/10, n/30. The machine was shipped FOB shipping point and freight charges were $2,000. The machine requires special mounting and wiring connections costing $10,000. When installing the machine, $1,300 in damages occurred. Compute the cost recorded for this machine assuming Granite paid within the discount period.

Total asset turnover is calculated by dividing average total assets by net sales.

Amortization is:

Holding a copyright:

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000. The machine is depreciated using the double-declining-balance method. The machine's useful life is estimated to be 5 years with a $4,000 salvage value. - Depreciation expense in year 2 is:

A company purchased a machine on January 1 of the current year for $750,000. Calculate the annual depreciation expense for each year of the machine's life (estimated at 5 years or 20,000 hours, with a salvage value of $75,000) using each of the below-mentioned methods. During the machine's 5-year life its hourly usage was: 3,000; 4,000; 5,000; 5,000; and 3,000 hours. $\begin{array} { l | l | l | l } & \text { Straight-line } & \text { Uhits-of-production } & \text { Double-declining balance } \\\hline \text { Year I } & & & \\\hline \text { Year 2 } & & & \\\hline \text { Yaar 3 } & & & \\\hline \text { Year 4 } & & & \\\hline \text { Year 5 } & & & \\\hline \text { Totals } & & &\end{array}$

Additions to land that increase the usefulness of the land such as parking lots, fences, and lighting are not depreciated.

__________are capital expenditures that make a plant asset more productive but do not always increase an asset's life; they often involve adding a component to an asset or replacing one of its old components with a better one.

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000. The machine is depreciated using the straight-line method. The machine's useful life is estimated to be 5 years with a $4,000 salvage value. -Depreciation expense in year 2 is: