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Exam 9: Plant Assets, natural Resources, and Intangibles

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Question 31

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A company purchased a computer on July 1,2015 for $50,000.Estimated useful life of the computer was 5 years and it has no residual value.Which of the following methods should be used to best match its expense against the revenue it produces?

A) the units-of-production method
B) the straight-line method
C) the double-declining-balance method
D) the first-in,first-out method

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

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Question 32

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An asset is said to be obsolete when a newer asset can perform the job more efficiently.

A) True
B) False

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Question 33

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Which of the following depreciation methods allocates a varying amount of depreciation each year based on an asset's usage?

When a business sells a plant asset for book value,a gain or loss should be recorded.

Acer Inc.plans to develop a shopping center.In the first quarter,they spent the following amounts: -What amount should be recorded as the land improvements cost?

The units-of-production method allocates varying amounts of depreciation each year based on an asset's usage.

During the year 2015,Sanchez Corp.sold goods and earned revenue of $16,000,000.The corporation's beginning total assets was $8,000,000.Its assets turnover ratio was 1.6 times.Calculate the ending total assets of Sanchez.

Hastings Corporation has purchased a group of assets for $15,000.The assets and their relative market values are listed below. Which of the following amounts would be debited to the Land account?

On January 1,2015,Anodel Inc.acquired a machine for $1,000,000.The estimated useful life of the asset is 5 years.Residual value at the end of 5 years is estimated to be $50,000.Calculate the depreciation expense per year using the straight-line method.

Which of the following is the correct accounting treatment for a patent?

Which of the following is a characteristic of a plant asset,such as a building?

In common with other intangible assets,goodwill must be amortized each year.

Equipment was purchased for $24,000.The equipment's estimated useful life was 5 years,and its residual value was $4,000.The straight-line method of depreciation was used.Calculate gain or loss on sale if the equipment is sold for $18,000 at the end of the first year.Give journal entry to record the sale of equipment at book value.

The double-declining-balance method ignores the residual value while calculating the amount of depreciation.

A machine that was purchased for $100,000 has an accumulated depreciation of $70,000 as of the current date.The corporation exchanges the machine for a new machine.The new machine has a market value of $120,000 and the corporation pays cash of $100,000.Assume the exchange has commercial substance.What is the result of this exchange?

The gain or loss on the sale of a plant asset is determined by comparing ________.

Trimer Corp sold a truck for $15,000 cash.It was originally purchased for $50,000 and had accumulated depreciation of $30,000 at the time of sale.Give the journal entry for the sale of truck.

On June 30,2015,Regal Furniture discarded fully depreciated equipment costing $35,000.Journalize the disposal of the equipment.

The asset turnover ratio measures the amount of net sales generated for each average dollar of total assets invested.

A photocopier costs $95,000 when new and has accumulated depreciation of $88,000.Suppose the corporation junks this machine and receives nothing.What is the result of the disposal transaction?