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Exam 9: Property, Plant and Equipment Intangibles

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Question 91

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Impairment losses must be assessed by companies on an annual basis.

A) True
B) False

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Question 92

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When assigning values to an exchange of assets you should always use the fair value of the asset received.

A) True
B) False

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Question 93

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A machine that cost $40,000 and had accumulated depreciation of $30,000 was traded in on a new machine, which had an estimated 20-year life and a cash price of $50,000. If a $7,000 trade-in allowance was received on the old machine, the new machine should be valued at

Intangible assets

Intangible assets do not include

Because depreciation is based on predictions of residual value and useful life, depreciation is an estimate.

On January 1 of this year, SportsWorld purchased a new cash register for $5,400. This register has a useful life of 10 years and a residual value of $400. Using the double-declining-balance method, how much depreciation expense should SportsWorld recognize for next year?

On January 1, 2023, PetraCo ordered a new machine to help increase production for one of its most popular products. The machine had an invoice price of $30,000 and PetraCo was required to pay shipping ($1,200) and insurance during shipping ($300) by boat from British Columbia to Toronto. The machine arrived on January 5, 2019 and was installed at a cost of $800 and calibrated and tested for a cost of $200. On February 1, 2019 it was put into operation. PetraCo's fiscal year runs from January to December. Round all final answers to the nearest dollar. -Prepare a journal entry (or entries) to record all costs associated with the new machine

An asset can be disposed of by

On July 1, 2020, Delta Company purchased and placed in service a machine with a cost of $460,000. Delta estimated the service life to be 6 years or 60,000 units of output, with an estimated residual value of $80,000. During 2020, 15,000 units were produced. Prepare the necessary December 31, 2020, adjusting journal entry to record depreciation for 2020 assuming Delta uses the double-declining-balance method to the nearest whole month. Round all calculations to 4 decimals.

A depreciation method in which a property, plant and equipment asset's depreciation expense for the period is determined by applying a constant depreciation rate each year to the asset's beginning book value is called

Machinery after two years worth of depreciation has an opening book value of $6,400. At the beginning of the third year, the predicted number of years remaining in its useful life changes from three years to four years and its estimated residual value changes from the original $1,000 to $400. The revised annual depreciation using the straight-line method is $1,500.

Depreciation measures the decline in market value of an asset.

A company is required to purchase all assets at the beginning of an accounting period so that a full year's worth of depreciation can be taken.

A main accounting issue for property, plant and equipment is

The cost of land can include

Explain how each of the following depreciation methods is calculated: straight-line, units-of-production, and double-declining-balance.

Treating low-cost asset purchases as expenses is allowed by which principle?

Drilling rights are legal permissions to extract natural resources from the earth and are treated as intangible assets.

How is the cost principle applied to property, plant and equipment?