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Exam 9: Plant Assets, Natural Resources and Intangible Assets

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Question 51

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

A) salvage value of the asset sold.
B) market value of the asset sold.
C) book value of the asset sold.
D) accumulated depreciation on the asset sold.

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Question 52

Multiple Choice

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Henson Company incurred $600,000 of research and development costs in its laboratory to develop a new product.It spent $90,000 in legal fees for a patent granted on January 2, 2021.On July 31, 2021, Henson paid $60,000 for legal fees in a successful defense of the patent.What is the total amount that should be debited to Patents through July 31, 2021?

A) $600,000
B) $150,000
C) $750,000
D) Some other amount

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Question 53

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Research and development costs that result in a successful product that is patentable are charged to the Patent account.

Additions and improvements

Natural resources are long-lived productive assets that are extracted in operations and are replaceable only by an act of nature.

Which of the following is not true of ordinary repairs?

An asset that cannot be sold individually in the market place is

In calculating depreciation, both plant asset cost and useful life are based on estimates.

The cost of a purchased building includes all of the following except

The depreciable cost of a plant asset is its original cost minus obsolescence.

A term that is not synonymous with property, plant, and equipment is

A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership.

Conceptually, the cost allocation procedures for natural resources parallels that of plant assets.

When constructing a building, a company is permitted to include the acquisition cost and certain interest costs incurred in financing the project.

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

On January 1, 2019, Santo Company purchased a computer system for $30,500.The system had an estimated useful life of five years and no salvage value.At January 1, 2021, the company revised the remaining useful life to two years.What amount of depreciation will be recorded for 2021 and 2022?

If the proceeds from the sale of a plant asset exceed its book value, a gain on disposal occurs.

Intangible assets

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 prior periods.

Losses on exchanges of plant assets that have commercial substance are