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157.A truck that cost $72,000 and on which $60,000 of accumulated depreciation has been recorded was disposed of for $18,000 cash. The entry to record this event would include a a.gain of $6,000. b.loss of $6,000. c.credit to the Equipment account for $12,000. d.credit to Accumulated Depreciation for $60,000. 158.Orr Corporation sold equipment for $30,000..
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147.If disposal of a plant asset occurs during the year, depreciation is a.not recorded for the year. b.recorded for the whole year. c.recorded for the fraction of the year to the date of the disposal. d.not recorded if the asset is scrapped. 148.If a fully depreciated plant asset is still used by a company, the a.estimated.
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Ex. 261 Lynn Company owns equipment that cost $120,000 when purchased on January 1, 2014. It has been depreciated using the straight-line method based on estimated salvage value of $15,000 and an estimated useful life of 5 years. Instructions Prepare Lynn Company's journal entries to record the sale of the equipment in these.
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Ex. 270 During the current year, Marin Company incurred several expenditures. Briefly explain whether the expenditures listed below should be recorded as an operating expense or as an intangible asset. If you view the expenditure as an intangible asset, indicate the number of years over which the asset should be amortized..
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Ex. 252 Ermler Company purchased a machine at a cost of $80,000. The machine is expected to have a $5,000 salvage value at the end of its 5-year useful life.InstructionsCompute annual depreciation for the first and second years using the(a)straight-line method.(b)double-declining-balance method. Ex. 253 Alvarado Company purchased a new machine for $400,000. It.
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COMPLETION STATEMENTS               279.With the exception of land, plant assets experience a ______________ in service potential over their useful lives.               280.When vacant land is acquired, expenditures for clearing, draining, filling, and grading should be charged to the ______________ account.               281.The cost of demolishing an old building on land that has been.
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41.Research and development costs which result in a successful product which is patentable are charged to the Patent account. 42.The cost of a patent must be amortized over a 20-year period. 43.The cost of a patent should be amortized over its legal life or useful life, whichever is shorter. 44.The balances of the.
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BRIEF EXERCISES BE 227 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 to install a machine _____8.Fences _____9.Unpaid (past) property taxes.
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217.All of the following are intangible assets except a.copyrights. b.goodwill. c.patents. d.research and development costs. 218.A purchased patent has a legal life of 20 years. It should be a.expensed in the year of acquisition. b.amortized over 20 years regardless of its useful life. c.amortized over its useful life if less than 20 years. d.not amortized. 219.The asset turnover is computed.
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Ex. 277 Bell Company and Kene Company exchanged trucks on January 1, 2017. Bell's truck cost $140,000, had accumulated depreciation of $115,000, and has a fair value of $15,000. Kene's truck cost $105,000, had accumulated depreciation of $90,000, and has a fair value of $15,000. Instructions (a)Journalize the exchange for Bell Company. (b)Journalize the.
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Ex. 259 Presented below are selected transactions for Werley Company for 2017. Jan.1Received $9,000 scrap value on retirement of machinery that was purchased on January 1, 2007. The machine cost $90,000 on that date, and had a useful life of 10 years with no salvage value. April30Sold equipment for $34,000 that was purchased.
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97.Management should select the depreciation method that a.is easiest to apply. b.best measures the plant asset's market value over its useful life. c.best measures the plant asset's contribution to revenue over its useful life. d.has been used most often in the past by the company. 98.The depreciation method that applies a constant percentage to depreciable.
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Ex. 265 Quayle Mining Company purchased land containing an estimated 15 million tons of ore at a cost of $4,200,000. The land without the ore is estimated to be worth $600,000. The company expects to operate the mine for 12 years. Buildings costing $600,000 are erected on the site and are.
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Ex. 239 Garrison Company was organized on January 1. During the first year of operations, the following expenditures and receipts were recorded in random order in the account, Land. Debits               1.Cost of real estate purchased as a plant site (land and building).$  250,000               2.Accrued real estate taxes paid at the time of.
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67.Land improvements should be depreciated over the useful life of the a.land. b.buildings on the land. c.land or land improvements, whichever is longer. d.land improvements. 68.Mattox Company is building a new plant that will take three years to construct. The construction will be financed in part by funds borrowed during the construction period. There are.
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21.The depreciable cost of a plant asset is its original cost minus obsolescence. 22.Recording depreciation each period is an application of the expense recognition principle. 23.The Accumulated Depreciation account represents a cash fund available to replace plant assets. 24.Once an asset is fully depreciated, no additional depreciation can be taken even though the.
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137.Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets? a.Salvage value b.Estimated useful life c.Cash needed to replace the plant asset d.Cost 138.Depreciation is the process of allocating the cost of a plant asset over its service life in a.an equal and equitable manner. b.an accelerated and accurate.
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S-A E  240(Communication) Petersen Company received a letter from Jane Kimler, a customer. Jane had purchased $425 worth of clothing from Petersen on credit. She has made two payments of $50 each. She has missed the last two payments, and has received a collection letter from Petersen. Her total debt presently,.
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187.Copyrights are granted by the federal government a.for the life of the creator or 70 years, whichever is longer. b.for the life of the creator plus 70 years. c.for the life of the creator or 70 years, whichever is shorter. d.and therefore cannot be amortized. 188.Goodwill a.is only recorded when generated internally. b.can be subdivided and sold.
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Ex. 244 Identify the following expenditures as capital expenditures or revenue expenditures. (a)Replacement of worn out gears on factory machinery. (b)Construction of a new wing on an office building. (c)Painting the exterior of a building. (d)Oil change on a company truck. (e)Painting and lettering of a used truck upon acquisition of the truck. (f)Overhaul of a truck.
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Ex. 268 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—AmortizationP—Depletion D—DepreciationN—None of these ____              1. Goodwill              7.Timberlands ____              2.Land              8.Franchises (indefinite life) ____              3.Buildings              9.Licenses (limited life) ____              4.Patents              10.Land Improvements ____              5.Copyrights11.Oil Deposits ____              6.Research and development.
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Ex. 242 Fleming Company purchased a machine on January 1, 2017. In addition to the purchase price paid, the following additional costs were incurred: (a) sales tax paid on the purchase price, (b) transportation and insurance costs while the machinery was in transit from the seller, (c) personnel training costs for.
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 MULTIPLE CHOICE QUESTIONS 57.The cost of a purchased building includes all of the following except a.closing costs. b.real estate broker's commission. c.remodeling costs. d.All of these are included. 58.A company purchased land for $90,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of.
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197.During 2017, Stein Corporation reported net sales of $5,000,000 and net income of $2,100,000. Stein also reported beginning total assets of $1,000,000 and ending total assets of $1,500,000. Stein’s asset turnover is a.5.0 times. b.4.0 times. c.3.3 times. d.1.7 times. 198.Natural resources are generally shown on the balance sheet under a.Intangibles. b.Investments. c.Property, Plant, and Equipment. d.Owner's Equity. 199.Which of.
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Ex. 254 Dougan Company purchased equipment on January 1, 2016 for $90,000. 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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Ex. 260 Zimmer Company sold the following two machines in 2017: Machine A Machine B Cost$76,000$80,000 Purchase date7/1/131/1/14 Useful life8 years5 years Salvage value$4,000$4,000 Depreciation methodStraight-lineDouble-declining-balance Date sold7/1/178/1/17 Sales price$35,000$16,000 Instructions Journalize all entries required to update depreciation and record the sales of the two assets in 2017. The company has recorded depreciation on the machines through December 31, 2016. .
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TRUE-FALSE STATEMENTS 1.All plant assets (fixed assets) must be depreciated for accounting purposes. 2.When purchasing land, the costs for clearing, draining, filling, and grading should be charged to a Land Improvements account. 3.When purchasing delivery equipment, sales taxes and motor vehicle licenses should be charged to Delivery Equipment. 4.Land improvements are generally charged to.
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107.Moreno Company purchased equipment for $900,000 on January 1, 2016, and will use the double-declining-balance method of depreciation. It is estimated that the equipment will have a 3-year life and a $40,000 salvage value at the end of its useful life. The amount of depreciation expense recognized in the year.
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Ex. 258 Grayson's Lumber Mill sold two machines in 2018. The following information pertains to the two machines: PurchaseUsefulSalvageDepreciationSales Machine   Cost  Date   Life  Value    Method   Date Sold  Price #1$66,0007/1/145 yrs.$6,000Straight-line7/1/18$15,000 #2$50,0007/1/175 yrs.$5,000Double-declining-12/31/18$30,000 balance Instructions (a)Compute the depreciation on each machine to the date of disposal. (b)Prepare the journal entries in 2018 to record 2018 depreciation and the sale of each.
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*Ex. 276 Dolan Company exchanges equipment with Eaton Company and Pawnee Company exchanges equipment with Fiero Company. The following information pertains to the exchanges: Dolan CompanyPawnee Company Equipment (cost)$228,000$192,000 Accumulated depreciation100,00090,000 Fair value of the equipment150,00084,000 Cash paid90,000-0- *Ex. 276(Cont.) Instructions Prepare the journal entries to record the exchanges on the books of Dolan Company and Pawnee Company. The.
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Ex. 272 Compute the asset turnover based on the following: Beginning total assets$   800,000 Ending total assets1,200,000 Net income300,000 Net sales2,500,000 Ex. 273 During 2017 Lopez Corporation reported net sales of $3,200,000 and net income of $1,200,000. Its balance sheet reported average total assets of $1,600,000. Instructions Calculate the asset turnover. $1,600,000 Ex. 274 Indicate in the blank spaces below, the section.
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87.A truck was purchased for $180,000 and it was estimated to have a $36,000 salvage value at the end of its useful life. Monthly depreciation expense of $3,000 was recorded using the straight-line method. The annual depreciation rate is a.20%. b.2%. c.8%. d.25%. 88.A company purchased factory equipment on April 1, 2017 for $160,000. It.
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77.Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally a.expensed when incurred. b.capitalized as a part of the cost of the asset. c.debited to the Accumulated Depreciation account. d.not recorded until they become material in amount. 78.Which of the following is not true of ordinary repairs? a.They primarily benefit.
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127.Able Towing Company purchased a tow truck for $180,000 on January 1, 2016. It was originally depreciated on a straight-line basis over 10 years with an assumed salvage value of $36,000. On December 31, 2018, before adjusting entries had been made, the company decided to change the remaining estimated life.
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S-A E 239(Ethics) Brislin Books, a small book publishing company, wrote off the debt of The Academic Success Center, and the Academy of Advanced Learning, both small private schools, after it determined that the schools were facing serious financial difficulty. No notice of the action was sent to the schools; Brislin.
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EXERCISES Ex. 237 Hunt Company purchased factory equipment with an invoice price of $90,000. Other costs incurred were freight costs, $1,100; installation wiring and foundation, $2,200; material and labor costs in testing equipment, $700; oil lubricants and supplies to be used with equipment, $500; fire insurance policy covering equipment, $1,400. The equipment.
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177.The cost of successfully defending a patent in an infringement suit should be a.charged to Legal Expenses. b.deducted from the book value of the patent. c.added to the cost of the patent. d.recognized as a loss in the current period. 178.An asset that cannot be sold individually in the market place is a.a patent. b.goodwill. c.a copyright. d.a trade.
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11.In calculating depreciation, both plant asset cost and useful life are based on estimates. 12.Using the units-of-activity method of depreciating factory equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had been used. 13.Salvage value is not subtracted from plant.
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167.In computing depletion, salvage value is a.always immaterial. b.ignored. c.impossible to estimate. d.included in the calculation. 168.If a mining company extracts 1,500,000 tons in a period but only sells 1,200,000 tons, a.total depletion on the mine is based on the 1,200,000 tons. b.depletion is recognized on the 1,500,000 tons extracted. c.depletion is recognized on the 1,200,000 tons extracted.
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Ex. 256 Karley Company sold equipment on July 1, 2017 for $75,000. The equipment had cost $210,000 and had $120,000 of accumulated depreciation as of January 1, 2017. Depreciation for the first 6 months of 2017 was $12,000. InstructionsPrepare the journal entry to record the sale of the equipment. Ex. 257 (a)Brown Company purchased.
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117.Drago Company purchased equipment on January 1, 2016, at a total invoice cost of $1,200,000. The equipment has an estimated salvage value of $30,000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at December 31, 2017, if the straight-line method of depreciation is.
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