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Exam 1: Property, plant and Equipment Intangibles

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Question 1

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A method that allocates an equal portion of the total depreciation for a property,plant and equipment asset to each unit produced is called

A) Accelerated depreciation
B) Double-declining-balance depreciation
C) Straight-line depreciation
D) Units-of-production depreciation
E) Capital cost allowance

F) C) and D)
G) A) and E)

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Question 2

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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) True
B) False

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Question 3

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SportsWorld discarded a display case it had purchased for $8,000.$7,200 in accumulated depreciation had been recorded to the date of sale.SportsWorld should recognize a gain or loss on disposal of

Non-current assets are any liabilities that are used in the operations of a business.

Fisherman Company purchased a light truck on October 1,20220 at a cost of $72,000.The truck is expected to last six years and have a residual value of $5,200.Fisherman Company uses the calendar year as their fiscal year,and the nearest whole month method for depreciation. (1)What is the depreciation expense for 2020,assuming the straight-line method is used? (2)What is the depreciation expense for 2021,assuming the double-declining-balance method at twice the straight-line rate is used?

ACS Company made the following expenditures in connection with the construction of its new cross fit facility: Prepare a schedule showing the amounts to be recorded as Land,Building,and Machinery and Equipment and Expenses.

On January 1,2020,Bailey Company purchased a machine for $106,000 that was expected to last five years and has a residual value of $6,000.At the beginning of 2023,Bailey decided that the machine's estimated useful life should be revised to a total of 6 years instead of 5.Also,the residual value was now estimated to be $5,500.Straight-line depreciation was used.Calculate the depreciation expense for 2023.

Twilight Manufacturing's property,plant and equipment records reveal the following information: Calculate the depreciation expense for each equipment item for the year ended December 31,2020,using the nearest whole month method.

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. -The machine was expected to last 10 years with a salvage value of $2,500.Prepare the journal entry to record depreciation for 2019 using the double-declining balance method of depreciation.

On September 30,2019,Sarina Industries acquired and placed in service a machine that cost $950,000.It was estimated that the machine has a service life of five years and a residual value of $77,566.Using the double-declining-balance method of depreciation,prepare a schedule showing the depreciation amounts for the years 2019 through 2024 (use the nearest whole month method and round answers to the nearest dollar).Sarina closes its books on December 31 of every year. Rate = 2/5 $\times$ 100 = 40%

Xeno Co.incurred the following transactions concerning its machinery:

A new machine is expected to produce 40,000 units of product during its 5-year life.The machine cost $38,000 and is estimated to have a $6,000 residual value.What is the first year's depreciation on the machine calculated by the straight-line method?

On July 1,2020,Suntera Corp.purchased and placed in service a machine with a cost of $460,000.Suntera estimated the service life to be 5 years or 30,000 units of output,with an estimated residual value of $6,000.During 2020,2,600 units were produced. (a)The straight-line method of depreciation (b)The units-of-production method of depreciation

JoyCo acquired equipment on April 1,2022,at a cost of $90,000 and with an estimated useful life of 10 years.The machine has a residual value of $10,000.JoyCo uses the double-declining-balance method of depreciation.How much depreciation should be recorded by JoyCo for the year ended December 31,2022?

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

Prime Co paid $200,000 to purchase a piece of land on which to build a new building.Additional costs incurred were: $\begin{array}{|l|r|}\hline \text { Real estate broker's commissions } & \$ 10,800 \\\hline \text { Legal fees of purchasing the real estate } & 1,400 \\\hline \text { Landscaping expenses } & 6,000 \\\hline \begin{array}{l}\text { Expense to demolish old house located on } \\\text { land }\end{array} & 1,500 \\\hline \begin{array}{l}\text { Proceeds from selling materials salvaged } \\\text { from old house }\end{array} & 900 \\\hline\end{array}$ What dollar amount of the above costs should be allocated to Land and what amount should be allocated to the new Building?

If a machine is damaged during unpacking,the repairs are added to its cost.

Explain what could cause the impairment of goodwill.How often should goodwill be tested to see if it is impaired?

A depreciation method that produces larger depreciation charges during the early years of an asset's life and smaller charges in the later years is

Natsuko Company traded an old forklift for a new forklift,receiving a $10,500 trade-in allowance and paying the remaining $37,200 in cash.The old forklift cost $39,000,and straight-line depreciation of $27,200 had been recorded to the date of trade under the assumption it would last 5 years and have a $5,000 residual value.At the date of trade,the fair value of the old forklift is $11,000,however the fair value of the new forklift is not known.(1)What was the book value of the old forklift?(2)At what amount should the new forklift be recorded?