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196.Trademarks are generally shown on the balance sheet under a.Intangibles. b.Investments. c.Property, Plant, and Equipment. d.Current Assets. 197.Hopson Company incurred $450,000 of research and development costs in its laboratory to develop a new product. It spent $60,000 in legal fees for a patent granted on January 2, 2012. On July 31, 2012, Hopson paid $45,000.
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156.A truck costing $110,000 was destroyed when its engine caught fire. At the date of the fire, the accumulated depreciation on the truck was $50,000. An insurance check for $125,000 was received based on the replacement cost of the truck. The entry to record the insurance proceeds and the disposition.
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Ex. 243 Presented below are selected transactions for the Tinker Company for 2013. Jan.1Retired a piece of equipment that was purchased on January 1, 2003. The equipment cost $75,000 on that date, and had a useful life of 10 years with no salvage value. April30Sold equipment for $35,000 that was purchased on January.
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              21.Capital expenditures are expenditures that increase the company's investment in productive facilities.               22.Ordinary repairs should be recognized when incurred as revenue expenditures.               23.A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership.               24.A permanent decline in the market value of an asset is.
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116.Pearson Company bought a machine on January 1, 2012. The machine cost $108,000 and had an expected salvage value of $18,000. The life of the machine was estimated to be 5 years. The depreciable cost of the machine is a.$108,000. b.$90,000. c.$30,000. d.$18,000. 117.Pearson Company bought a machine on January 1, 2012. The machine cost.
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*216.Foyle Company purchased a new van for floral deliveries on January 1, 2012. The van cost $40,000 with an estimated life of 5 years and $10,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the depreciation expense for 2012? a.$8,000. b.$6,000. c.$12,000. d.$16,000.              .
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Be. 230 For each item listed below, enter a code letter in the blank space to indicate the allocation terminology for the item. Use the following codes for your answer: A—AmortizationD—DepreciationN—None of these ____              1.Copyrights6.Research and Development Costs ____              2.Land_              7.Equipment ____              3.Buildings              8.Franchises ____              4.Patents              9.Annual licensing fees ____              5.Trademarks10.Land Improvements Be. 231 Using the following data for.
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MATCHING Set 1 287.Match the items below by entering the appropriate code letter in the space provided. A.Plant assetsF.Units-of-activity method B.DepreciationG.Double-declining-balance method C.Book valueH.MACRS D.Salvage valueI.Revenue expenditures E.Straight-line methodJ.Capital expenditures ____              1.Small expenditures which primarily benefit the current period. ____              2.Cost less accumulated depreciation. ____              3.An accelerated depreciation method used for financial statement purposes. ____              4.Tangible resources that are used in.
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              86.In computing depreciation, salvage value is a.the fair value of a plant asset on the date of acquisition. b.subtracted from accumulated depreciation to determine the plant asset's depreciable cost. c.an estimate of a plant asset's value at the end of its useful life. d.ignored in all the depreciation methods.               87.When estimating the useful.
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*Ex. 259 Tony’s, a popular pizza hang-out, has a thriving delivery business. Tony’s has a fleet of three delivery automobiles. Prior to making the entry for this year's depreciation expense, the subsidiary ledger for the fleet is as follows: Accumulated EstimatedDepr.—Beg.Miles Operated Car   Cost Salvage ValueLife in Milesof the Year  During Year 1$21,000$3,00050,000$2,10020,000 215,0002,40060,0001,89022,000 323,5002,50070,0002,00019,000 Instructions (a)Determine the depreciation.
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              96.A machine was purchased for $18,000 and it was estimated to have a $3,000 salvage value at the end of its useful life. Monthly depreciation expense of $250 was recorded using the straight-line method. The annual depreciation rate is a.25%. b.2%. c.16%. d.20%.               97.A company purchased factory equipment on April 1, 2012, for.
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              66.Arnold Company purchases a new delivery truck for $45,000. The sales taxes are $2,500. The logo of the company is painted on the side of the truck for $1,200. The truck’s annual license is $120. The truck undergoes safety testing for $220. What does Arnold record as the cost.
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Ex. 244 Vineyard Company sold the following two pieces of equipment in 2012: Equipment A Equipment B Cost$100,000$63,000 Purchase date7/1/081/1/09 Useful life8 years5 years Salvage value$4,000$3,000 Depreciation methodStraight-lineStraight-line Date sold7/1/129/1/12 Sales Price$39,000$20,000 Instructions Journalize all entries required to update depreciation and record the sales of the two assets in 2012. The company has recorded depreciation on the equipment through December 31,.
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Ex. 247 Forcum Company reports the following information (in millions) during a recent year: net sales, $12,408.5; net earnings, $304.9; total assets, ending, $4,312.6; and total assets, beginning, $4,254.3. Instructions (a)Calculate the (1) return on assets, (2) asset turnover, and (3) profit margin ratios. (b)Prove mathematically how the profit margin and asset turnover ratios.
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SHORT-ANSWER ESSAY QUESTIONS S-A E 289 In general, how does one determine whether or not an expenditure should be included in the acquisition cost of property, plant, and equipment? S-A E 290 How is the cost for a plant asset measured in a cash transaction? In a noncash transaction? S-A E 291 Comment on the validity.
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Ex. 253 Nelson Company, organized in 2012, has these transactions related to intangible assets in that year: Jan.2Purchased a patent (5-year life) $300,000. Apr.1Goodwill purchased (indefinite life) $360,000. July1Acquired a 9-year franchise; expiration date July 1, 2021, $630,000. Sept.1Research and development costs $185,000. Ex. 253(Cont.) Instructions (a)Prepare the necessary entries to record these intangibles. All costs incurred were.
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136.Which of the following is not true of ordinary repairs? a.They primarily benefit the current accounting period. b.They can be referred to as revenue expenditures. c.They maintain the expected productive life of the asset. d.They increase the productive capacity of the asset. 137.Additions and improvements a.occur frequently during the ownership of a plant asset. b.normally involve immaterial.
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Ex. 236 On March 1, 2012, Geoffrey Company acquired real estate, on which it planned to construct a small office building, by paying $90,000 in cash. An old warehouse on the property was demolished at a cost of $8,200; the salvaged materials were sold for $2,200. Additional expenditures before construction began.
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186.A patent a.has a legal life of 20 years. b.is not amortized. c.can be renewed indefinitely. d.is rarely subject to litigation because it is an exclusive right.               187.If a company incurs legal costs in successfully defending its patent, these costs are recorded by debiting a.Legal Expense. b.the Intangible Loss account. c.the Patent account. d.a revenue expenditure account. 188.Copyrights are.
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*206.A plant asset cost $96,000 and is estimated to have a $12,000 salvage value at the end of its 8-year useful life. The annual depreciation expense recorded for the third year using the double-declining-balance method would be a.$8,040. b.$13,500. c.$11,812. d.$9,190. *207.On January 1, a machine with a useful life of five years and a.
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              31.A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.               32.The return on assets ratio indicates how efficiently a company uses its assets.               33.The return on assets ratio can be computed from the profit.
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*Ex. 262 Railsback Company purchased a machine on January 1, 2012, at a cost of $64,000. The machine is expected to have an estimated salvage value of $4,000 at the end of its 5-year life. The company capitalized the machine and depreciated it in 2012 using the double-declining-balance method of depreciation..
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Ex. 241 Prepare the journal entries to record the following transactions for Reese Company, which has a calendar year end and uses the straight-line method of depreciation. (a)On September 30, 2012, the company sold old equipment for $36,000. The equipment was purchased on January 1, 2010, for $76,000 and was estimated.
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176.A patent should a.be amortized over a period of 20 years. b.not be amortized. c.be amortized over its useful life or 20 years, whichever is longer. d.be amortized over its useful life or 20 years, whichever is shorter.               177.The cost of successfully defending a patent in an infringement suit should be a.charged to Legal Expenses. b.deducted.
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*Ex. 261 Mideast Airlines purchased a 747 aircraft on January 1, 2010 at a cost of $32,000,000. The estimated useful life of the aircraft is 20 years, with an estimated salvage value of $4,000,000. Instructions Compute the accumulated depreciation and book value at December 31, 2012 using the straight-line method and the double-declining-balance.
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              76.Which of the following is included in the cost of constructing a building? a.Cost of paving a parking lot. b.Cost of repairing vandalism damage incurred shortly after construction is complete. c.Interest incurred during construction. d.Cost of removing the demolished building existing on the land when it was purchased.               77.The balance in the Accumulated.
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*Ex. 257 Redeker Company purchased equipment on January 1, 2011, for $80,000. It is estimated that the equipment will have a $5,000 salvage value at the end of its 5-year useful life. It is also estimated that the equipment will produce 100,000 units over its 5-year life. Instructions Answer the following independent questions. 1.Compute.
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MULTIPLE CHOICE QUESTIONS               46.A company purchased land for $210,000 cash. Real estate brokers' commission was $15,000 and $21,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the cost principle, the cost of land would be recorded at a.$231,000. b.$210,000. c.$225,000. d.$246,000.               47.A company.
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Exercises Ex. 234 For each entry below make a correcting entry if necessary. If the entry given is correct, then state "No entry required." (a)The $50 cost of repairing a printer was charged to Computer Equipment. (b)The $5,500 cost of a major engine overhaul was debited to Repair Expense. The overhaul is expected to.
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Ex. 251 For each of the following unrelated transactions, (a) determine the amount of the amortization for the current year, and (b) present the adjusting entries required to record amortization at year end. (1)Costs (it was not acquired) of $30,000 were incurred on January 1 to obtain a patent. On January 31,.
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TRUE-FALSE STATEMENTS               1.A current liability must be paid out of current earnings.               2.If any portion of a long-term debt is to be paid in the next year, the entire debt should be classified as a current liability.               3.Current liabilities are expected to be paid within one year or the operating.
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IFRS QUESTIONS               1.As a recent graduate of State University you're aware that IFRS requires component depreciation for plant assets. A friend has asked you to succinctly explain what component depreciation means. Which of the following correctly describes component depreciation? a.The method used to ensure that the depreciation rate remains constant from.
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Ex. 245 Phill Co. has equipment that cost $54,000 and has been depreciated $30,000. Instructions Record entries for the disposal under the following assumptions. (a)It was scrapped as having no value. (b)It was sold for $29,000. (c)It was sold for $18,000. Ex. 246 Here are selected 2012 transactions of Howe Corporation. Jan.     1Retired a piece of equipment that was.
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S-A E 298(Communication) The Old Fix-It is a company specializing in the restoration of old homes. To showcase its work, the company purchased an old Victorian home in downtown Pittsburg, Kansas on January 2, 2008. The original home was purchased for $125,000. A new heating and air-conditioning system was added for.
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BRIEF Exercises Be. 222 Indicate whether each of the following expenditures should be classified as land (L), land improvements (LI), buildings (B), equipment (E), or none of these (X). _____1.  Parking lots _____2.  Electricity used by a machine _____3.  Excavation costs _____4.  Interest on building construction loan _____5.  Cost of trial runs for machinery _____6.  Drainage costs _____7.  Cost.
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Ex. 240 (a)Faster Company purchased equipment in 2005 for $92,000 and estimated an $8,000 salvage value at the end of the equipment's 10-year useful life. At December 31, 2011, there was $58,800 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2012, the.
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Ex. 238 Mike Geary, the controller of Shellhammer Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2012. Here are his findings: Type of Asset Date Acquired Cost Accumulated Depreciation, Jan. 1, 2012 Useful Life (in Years) Salvage Value Old Proposed Old Proposed Building Jan. 1, 2004 $2,250,000 $430,000 40 50 $100,000 $77,000 Warehouse Jan. 1, 2007      240,000     46,000 25 20   10,000     8,000 All assets are.
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166.The following information is provided for Nguyen Company and Northwest Corporation. (in $ millions)Nguyen CompanyNorthwest Corporation Net income 2012              $275              $390 Net sales 2012              1,500              4,100 Total assets 12/31/10              1,000              2,400 Total assets 12/31/11              1,050              3,000 Total assets 12/31/12              1,150              4,000 What is Nguyen's return on assets for 2012? a.400% b.136% c.25% d.73% 167.The following information is provided for Nguyen Company and.
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              274.The declining-balance method of computing depreciation is known as an _____________ depreciation method.               275.Ordinary repairs that maintain operating efficiency and expected productive life are called _______________.               276.Additions and improvements are costs incurred to increase the operating efficiency, productive capacity, or expected useful life and are referred to as _________________.              .
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COMPLETION STATEMENTS               264.The _______________ price is equal to the fair market value of the asset given up or the fair market value of the asset received.               265.With the exception of land, plant assets experience a ______________ in service potential over their useful lives.               266.When vacant land is acquired, expenditures for.
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Set 2 288.Match the items below by entering the appropriate code letter in the space provided. A.Gain on disposalF.Return on assets ratio B.Loss on disposalG.Goodwill C.TrademarkH.Amortization D.Capital leaseI.Intangible asset E.Asset turnover ratioJ.Research and development costs ____              1.Process of allocating the cost of an intangible asset to expense over its useful life. ____              2.Is recorded if the proceeds from.
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*Ex. 263 Stan's Lumber Mill sold two pieces of equipment in 2012. The following information pertains to the two pieces of equipment: PurchaseUsefulSalvageDepreciationSales Machine   Cost  Date   Life  Value    Method   Date Sold  Price #1$86,0007/1/085 yrs.$6,000Straight-line7/1/12$20,000 #2$70,0001/1/115 yrs.$5,000Double-declining-12/31/12$27,000 balance Instructions (a)Compute the depreciation on each piece of equipment to the date of disposal. (b)Prepare the journal entries in 2012 to record 2012.
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              56.Whyte Clinic purchases land for $240,000 cash. The clinic assumes $3,000 in property taxes due on the land. The title and attorney fees totaled $2,000. The clinic had the land graded for $4,400. What amount does Whyte Clinic record as the cost for the land? a.$244,400. b.$240,000. c.$249,400. d.$245,000.               57.Burke Company purchases land.
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Ex. 255 Jensen Company purchased a new machine on September 1, 2012, at a cost of $128,000. The company estimated that the machine has a salvage value of $8,000. The machine is expected to be used for 80,000 working hours during its 8-year life. Instructions Compute depreciation using the following methods in the.
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