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Exam 9: Plant Assets, Natural Resources, and Intangible Assets

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Question 21

Multiple Choice

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The entry to record patent amortization usually includes a credit to

A) Amortization Expense.
B) Accumulated Amortization.
C) Accumulated Depreciation.
D) Patents.

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Question 22

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In recording the acquisition cost of an entire business,

A) goodwill is recorded as the excess of cost over the fair value of identifiable net assets.
B) assets are recorded at the seller's book values.
C) goodwill, if it exists, is never recorded.
D) goodwill is recorded as the excess of cost over the book value of identifiable net assets.

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Question 23

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On October 1, 2015, Holt Company places a new asset into service. The cost of the asset is $120,000 with an estimated 5-year life and $30,000 salvage value at the end of its useful life. What is the depreciation expense for 2015 if Holt Company uses the straight-line method of depreciation?

Ordinary repairs should be recognized when incurred as revenue expenditures.

Equipment that cost $420,000 and on which $200,000 of accumulated depreciation has been recorded was disposed of for $180,000 cash. The entry to record this event would include a

Sargent Corporation bought equipment on January 1, 2015. The equipment cost $360,000 and had an expected salvage value of $60,000. The life of the equipment was estimated to be 6 years. The depreciable cost of the equipment is

Which of the following statements concerning financial statement presentation is not a true statement?

A gain on sale of a plant asset occurs when the proceeds of the sale are greater than the

An exchange of plant assets has commercial substance if the future cash flows change as a result of the exchange.

The asset turnover is calculated as total sales divided by ending total assets.

A company has the following assets: The total amount reported under Property, Plant, and Equipment would be

Losses on an exchange of plant assets that has commercial substance are

A company purchased factory equipment on April 1, 2015 for $160,000. It is estimated that the equipment will have a $20,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2015 is

On July 1, 2015, Jenks Company purchased the copyright to Jackson Computer tutorials for $324,000. It is estimated that the copyright will have a useful life of 5 years with an estimated salvage value of $24,000. The amount of Amortization Expense recognized for the year 2015 would be

Land improvements are generally charged to the Land account.

Which of the following is not true of ordinary repairs?

A change in the estimated useful life of a plant asset may cause a change in the amount of depreciation recognized in the current and future periods, but not to prior periods.

Capital expenditures are expenditures that increase the company's investment in productive facilities.

The Accumulated Depletion account is deducted from the cost of the natural resource in the balance sheet.

A truck was purchased for $180,000 and it was estimated to have a $36,000 salvage value at the end of its useful life. Monthly depreciation expense of $3,000 was recorded using the straight-line method. The annual depreciation rate is