Question 1

On July 1 of the current year,Glover Mining Co.pays $5,400,000 for land estimated to contain 7,200,000 tons of recoverable ore.It installs machinery on July 3 costing $864,000 that has an 8 year life and no salvage value and is capable of mining the ore deposit in six years.The company removes and sells 745,000 tons of ore during its first six months of operations ending on December 31.Depreciation of the machinery is in proportion to the mine's depletion as the machinery will be abandoned after the ore is mined.Prepare the entries Glover must record for (a)the purchase of the ore deposit,(b)the costs and installation of the machinery,(c)the depletion assuming the land has a zero salvage value,and (d)the depreciation on the machinery.

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Question 2

Revenue expenditures to keep an asset in good operating condition; they are necessary if an asset is to perform to expectations over its useful life are called ________.

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Question 3

Identify the balance sheet classification of each of the following assets by placing an X in the correct classification: Plant Assets,Natural Resources,or Intangibles.

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Question 4

________ is an estimate of an asset's value at the end of its useful life.

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Question 5

On July 1 of the current year,Timberlake Company signed a contract to lease space in a building for 7 years.After taking possession of the leased space,Timberlake pays $140,000 for improving the office portion of the lease space.The improvements are paid on July 2 of the current year,and are estimated to have a useful life equal to 13 years.Prepare entries for Timberlake to record (a)its payment for the office improvements,(b)the December 31 year-end entry to amortize the office improvements.

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Question 6

A machine costing $450,000 with a 4-year life and an estimated salvage value of $30,000 is installed by Peters Company on January 1.The company estimates the machine will produce 1,050,000 units of product during its life.It actually produces the following units for the first 2 years: Year 1,260,000; Year 2,275,000.Enter the depreciation amounts for years 1 and 2 in the table below for each depreciation method.Show calculation of amounts below the table.
Double

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Question 7

The depreciation method that charges a varying amount to expense for each period of an asset's useful life depending on its usage is ________.

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Question 8

________ are capital expenditures that make a plant asset more productive but do not always increase an asset's life; they often involve adding a component to an asset or replacing one of its old components with a better one.

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Question 9

Westport Company reports the following in millions: net sales of $25,300 for Year 2 and $22,640 for Year 1; end-of-year total assets of $14,875 for Year 2 and $13,680 for Year 1.Compute its total asset turnover for Year 2 and assess its level if competitors average a total asset turnover of 2.0 times.

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Question 10

Additional costs of plant assets that do not materially increase the asset's life or productive capabilities are recorded as ________.

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Question 11

The depreciation method that uses a depreciation rate that is a multiple of the straight-line rate and applies it to an asset's beginning-of-period book value is ________.

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Question 12

Capital expenditures that extend an asset's useful life beyond its original estimate are called ________.

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Question 13

________ refers to a plant asset that is no longer useful in producing goods or services with a competitive advantage because of new inventions and improvements.

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Question 14

The depreciation method that recognizes equal amounts of annual depreciation over the life of an asset is ________.

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Question 15

The insufficient capacity of a company's plant asset to meet the company's productive demands is called ________.

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Question 16

Additional costs of plant assets that provide benefits extending beyond the current period; they increase or improve the type or amount of service an asset provides are treated as ________.

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Question 17

Match between columns
                        Premises: The process of allocating the cost of a natural resource to the period when it is consumed.
The amount by which the company's value exceeds the value of its individual assets and liabilities.
A cost reported as an expense on the current income statement because it does not provide a material benefit in future periods.
A measure of a company's effectiveness in using its assets to generate sales.
Nonphysical assets used in operations that give long-term rights or competitive advantages to their owners.
A depreciation method that charges a varying amount to expense for each period of an asset's useful life depending on its usage.
The process of systematically allocating the cost of an intangible asset to expense over its estimated useful life.
Expenditures to keep a plant asset in good operating condition.
An expenditure that makes a plant asset more efficient or productive.
A method of depreciation that yields larger expense during the early years of an asset's life and smaller expense in the later years.

Accepted Answer

The Answer of Units-of production method and Amortization and Intangible is...

Question 18

Match between columns
                        Premises: The process of allocating the cost of natural resources to the periods when they are consumed.
Assets that increase the benefits of land, have a limited useful life, and are subject to depreciation.
Improvements to leased property made by the lessee.
A process of becoming outdated and no longer used.
The total cost of a plant asset less its accumulated depreciation.
Major repairs that extend the useful life of a plant asset beyond its original estimate.
An exclusive right granted to its owner to manufacture and sell an item, or to use a process, for 20 years.
A right granted that gives its owner the exclusive privilege to publish and sell musical, literary, or artistic work during the life of the creator plus 70 years.
The insufficient capacity of plant assets to meet the company's productive demands.
An estimate of an asset's value at the end its benefit period.

Accepted Answer

The Answer of Copyright and Book value and Salvage value is...

Quiz 8: Accounting for Long-Term Assets