FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 18: Property, Plant, and Equipment

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Multiple Choice

Review LaterAdd Note

Review Later

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

A) apply the recoverability test, review circumstances that suggest impairment, compute the amount of the impairment.
B) apply the recoverability test, review circumstances that suggest impairment, record the amount of the impairment.
C) review circumstances that suggest impairment, apply the recoverability test, and compute the amount of the impairment.
D) review circumstances that suggest impairment, apply the recoverability test, record the amount of the impairment.

E) B) and C)
F) A) and D)

Correct Answer

verified

Show Answer

Question 52

True/False

Review LaterAdd Note

Review Later

The cost of land reported on the balance sheet is not depreciated.

A) True
B) False

Correct Answer

verified

Show Answer

Question 53

True/False

Review LaterAdd Note

Patents, land held for investment and copyrights are intangible assets.

The full disclosure principle requires businesses to show balance information in the depreciable asset accounts, accumulated depreciation amounts and methods used to compute depreciation expense.

Use of the sum-of-the-years'-digits method of depreciation results in lower depreciation charges in the early years of an asset's life and higher charges in the later years.

The entry to record amortization of the acquisition cost of an intangible asset includes a credit directly to the intangible asset account.

Harrod's Landscape Artists acquired a new truck for $42,000 less the trade-in allowance of $4,000 for his old truck. The old truck was purchased for $31,000 and had a book value of $5,000 on the exchange date. The entry to record the acquisition of the new truck will include a:

When the sum-of-the-years'-digits method is used to depreciate an asset with a four-year life, the depreciation expense is computed by multiplying a fractional part of the asset's cost less the salvage value. The denominator of the fraction each year is the number------------ .

Patents, trademarks, and copyrights are examples of --------------assets.

All of the following refer to the handling of a decline in value of property, plant, and equipment except:

Modern Products Company purchased new packaging equipment for $245,000 on January 1, 2019. The equipment is expected to be used for 6 years, or 60,000 operating hours. It has an estimated salvage value of $5,000. The equipment was used for 10,000 hours in 2019, 15,000 hours in 2020, and 12,000 hours in 2021. Compute annual depreciation expense for the first three years, using the straight-line method, the double-declining balance method, and the units of output method. $\begin{array}{|c|c|c|c|}\hline & \text { Straight-Line } & \begin{array}{c}\text { Double-Declining } \\\text { Balance }\end{array} & \text { Units of Output } \\\hline & \text { Method } & \text { Method } & \text { Method } \\\hline 2019 & & & \\\hline 2020 & & & \\\hline 2021 & & & \\\hline\end{array}$

The book value of an asset is:

Depreciation refers to the decrease in the market value of an asset.

Tangible personal property is depreciated but real property is not depreciated.

Under federal income tax rules, neither gains or losses are recognized on trade-ins.

The balance of an Accumulated Depletion account is subtracted from the related natural resource account to determine the book value of the natural resource.

In computing the current period expense associated with the depletion of a natural resource, the depletion per unit is calculated by dividing the cost of the natural resource by the total estimated amount of the resource to be extracted and then multiplying by the units extracted.

Depletion is the process of allocating the cost of natural resources to expense over the period in which the resource produces revenue.

In 2019, Lucky Mining Company paid $1,200,000 for mining rights. It is estimated that a total of 1,000,000 kilograms of ore are available to be extracted. During 2019, 135,000 kilograms of ore were mined. What is the amount of Depletion Expense recorded in the adjusting entry for 2019?

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.