Accounting Expert Answers & Study Resources : Page 9

165. At December 31, 2015, Great Coast Coffee Company's adjusted trial balance shows an espresso machine with a book value of $12,000. As part of the year end procedures GCC completed the asset impairment test on the machine and noted that the recoverable value of the machine was $6,000. Record.

147. Dersch Co. purchased a machine on January 1, 2014, for $1,500,000. Using the table below, calculate the annual depreciation expense for each year of the machine's life (estimated at 5 years or 50,000 hours with a residual value of $150,000). During the machine's life it was used 15,000; 14,000;.

11. Revenue expenditures are expenditures to keep assets in normal operating condition. 12. Capital expenditures are also called balance sheet expenditures. 13. SportsWorld spent $17,000 to remodel its store. This cost will be recognized with a debit to Store Building. 14. Treating small-dollar-amount capital expenditures as revenue expenditures is likely to mislead users.

197. ______________________ are costs that increase the usefulness of land, but have limited useful lives and are thus depreciated. 198. Replacement of a roof or renovation of a plant are examples of _______________________. 199. The three factors in calculating depreciation are: ____________, __________, ____________. 200. _____________ is the Income Tax Act equivalent for.

140. RoboCop Company paid $31,400 for a machine that was expected to last 5 years and have a residual value of $5,000. 141. Xeno Co. incurred the following transactions concerning its machinery: Xeno Co uses the calendar year as its fiscal year. Prepare the journal entry to record depreciation expense for 2014. Prepare the.

206. Match each of the following terms with the appropriate definition. 1. Obsolescence Management's estimate of the amount that will be recovered at the end of a property, plant and equipment item's useful life through a sale or as a trade-in allowance on the purchase of a new asset.   2. Subsequent capital expenditure A.

171. Aye Company's computer was destroyed by fire. The computer originally cost $5,000, and accumulated depreciation to the date of the fire was $900. The company received $2,000 from an insurance policy that covered the computer and will use that money to help pay for a new computer. Prepare the.

16. Subsequent expenditures are purchases made after the acquisition of equipment to operate, maintain, repair, and improve it. 17. Depreciation is the process of allocating the cost of a tangible asset in a rational and systematic manner over the asset's estimated useful life. 18. Residual value is an estimate of an asset's.

31. The most frequently used method of depreciation is the straight-line method. 32. The cost of an asset plus its accumulated depreciation equals the asset's book value. 33. The units of production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its.

194. Hawaii Kai purchased a leasehold property for $8,500,000. The leasehold expires in 15 years. Prepare the journal entry to record the first year's depreciation expense. 195. GenX Music purchased a music distributor's collection of songs for $1,423,000. The copyrights are expected to last another 34 years. Prepare the journal entry.

176. On April 1, 2015, Hogan Industries scrapped a machine that cost $10,000 and had accumulated depreciation through December 31, 2014, of $10,000. Prepare the journal entry to record the disposal of the machine. 177. On April 1, 2015, Lockhart Company discarded equipment that cost $80,000, had a useful life of.

175. On January 2, 2015, Mullins Company purchased a delivery truck for $45,000 cash. The truck had an estimated useful life of seven years and an estimated residual value of $3,000. Straight-line depreciation was used. Assuming the transactions have commercial substance, prepare the journal entries to record the disposition of the.

191. Matador & Company was preparing the annual financial statements and, as part of its year-end procedures, prepared the following schedule based on adjusted values at March 31, 2015: 1. Record the entry for any impairment loss assuming that Matador & Company recorded no impairment losses in previous years. 2. Record the.

189. Discuss accounting for an impairment of property, plant and equipment. 190. Matador & Company was preparing the annual financial statements and, as part of its year-end procedures, prepared the following schedule based on adjusted values at March 31, 2015: Record the entry for any impairment loss assuming that Matador & Company.

188. Danner Co. purchased a computer on January 1, 2014, for $1,600,000. The straight-line method of depreciation was used, based on an expected life of 6 years and a residual value of $130,000. Prepare the journal entries to record depreciation for the first 6 months of 2016 and the sale.

142. On January 1, 2014, Friar Company purchased a machine for $175,000 that was expected to last 6 years and have a residual value of $16,000. On January 4, 2017, Friar Company paid $25,000 for improvements to the machine, which increased the total estimated useful life from 6 to 10.

201. _______________________ depreciation provides for equal amounts of annual depreciation over the life of an asset. 202. ______________ is the process of systematically allocating the cost of an intangible asset to expense over its estimated useful life. 203. Revising estimates of the useful life or residual value of property, plant and equipment.

162. A machine was purchased for $37,000 and depreciated for 5 years on a straight-line basis under the assumption it would have a 10-year life and a $1,000 residual value. At the beginning of the machine's sixth year, it was recognized that it had 3 years of remaining life left,.

164. Wildcat Company purchased a heating system on January 2, 2003, for $625,000. The system had an estimated useful life of 15 years, with no residual value. On January 2, 2015, the company paid $33,000 cash for a complete renovation of the system, and now expects the system to last.

179. On April 1, 2015, Thunderbird Co sold a piece of equipment that had cost $35,000 on January 1, 2011. The equipment had a residual value of $5,000, a useful life 10 years, and double-declining-balance depreciation at twice the straight-line rate was used. On December 31, 2014, accumulated depreciation was.

152. A new machine is expected to produce 60,000 units of product during its 5-year life. The machine cost $180,000 and is estimated to have a $20,000 residual value. If the machine produces 7,200 units of product during its first year, what is the depreciation for the year calculated by the.

192. Discuss accounting for intangible assets. 193. On January 4, 2015, SportsWorld purchased a patent for $35,000 with a useful life of 10 years. Prepare the journal entry to amortize the patent for the calendar year 2015.     .

160. On January 1, 2014, Boone Company purchased a machine for $75,000 that had a 6-year life and a residual value of $6,000. After 3 years of use, on January 1, 2017, Boone Company paid $7,500 to improve the efficiency of the machine. The effect of the expenditure was to.

151. On October 1, 2014, Fisherman Company purchased a light truck, at a cost of $62,000. 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. (a) What.

181. During 2014, Storey Company acquired a new computer with a cash price of $12,800 by exchanging an old one on which Storey received a $1,500 trade-in. The old computer had cost $9,000 and its accumulated depreciation to the date of exchange was $5,500. This transaction has commercial substance. Prepare.

186. Hertzog Company purchased and installed a machine on February 1, 2014, at a total cost of $72,000. Straight-line depreciation was calculated based on the assumption of a five-year life and no residual value. The machine was disposed of on July 31, 2017. Assuming the machine was sold for $15,000, prepare.

157. On July 1, 2014, Delta Company purchased and placed in service a machine with a cost of $340,000. Delta estimated the service life to be 6 years or 60,000 units of output, with an estimated residual value of $80,000. During 2014, 15,000 units were produced. Prepare the necessary December 31,.

205. Match each of the following terms with the appropriate definition. 1. Accelerated depreciation A depreciation method in which an asset's depreciation expense for the period is determined by applying a constant depreciation rate to the asset's book value at the beginning of the year.   2. Leasehold An expenditure that should appear on the.

169. Five years ago, Sanford and Sons purchased equipment for $108,000 which had an estimated useful life of 10 years with an expected residual value of $15,000. At the end of five years, the equipment's accumulated depreciation is $46,500. Prepare the journal entry to record the sale of the equipment.

168. Discuss the accounting procedures involved for asset disposal through discarding, selling, or exchanging an asset.     .

36. SportsWorld purchased store equipment for $65,000. The equipment has an estimated residual value of $6,000, with an estimated useful life of 10 years. The annual depreciation using the straight-line method will be $3,900 per year. 37. A company is required to purchase all assets at the beginning of an accounting.

149. On January 2, 2014, Far Co. purchased a machine for $525,000. The company expects the machine to last for 10 years or 50,000 hours of operation, with an estimated residual value of $15,000. During 2014 the machine was operated for 3,000 hours, while in 2015 it was operated for.

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

138. How is the cost principle applied to property, plant and equipment? 139. RoboCop Company paid $31,400 for a machine that was expected to last 5 years and have a residual value of $5,000.     .

  41. The current portion of long-term debt: A. Refers to the part of long-term debt that is due within one year. B. Is shown separately from the long term portion on the balance sheet. C. Must be disclosed. D. Will be a known amount. E. All of these answers are correct. 42. Fees accepted in advance.

159. Jelly Bean had the following property, plant and equipment purchases during 2014: (1) On April 4, equipment costing $150,000 with a 5-year service life and an estimated $40,000 residual value was purchased. (2) On October 4, a machine costing $230,000 with a 5 year service life and an estimated $50,000 residual.

183. On April 1, Fog Company traded an old machine that originally cost $32,000 and had been depreciated $24,000 for a new machine that had a cash price of $40,000. Assuming that this transaction has commercial substance, (1) Prepare the journal entry to record the exchange under the assumption that a $5,000.

184. 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.

26. Regardless of the method of depreciation, total depreciation expense will be the same over an asset's useful life. 27. Financial accounting and tax accounting require the same recordkeeping; therefore, there should be no difference in results between the two accounting systems. 28. Companies are required to use the straight line depreciation.

155. On January 1, 2014, High Flying Airways acquired and placed in service a plane that cost $8,000,000. The plane's service life and residual value were estimated at 5 years and $1,500,000, respectively. Calculate depreciation for 2014-2018, assuming the following alternative depreciation methods are used: (a) Straight-line. (b) Double-declining-balance.     .

148. 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, 2014, using the nearest whole month method.     .

2. A company's obligations not expected to be paid within the longer of one year of the balance sheet date or the next operating cycle are reported as current liabilities. 3. All expected future payments are liabilities. 4. A liability exists because of a past event that creates a future obligation for.

144. Compare the three different depreciation methods: straight-line, units of production, and double-declining balance.     .

150. On January 1, 2014, a machine costing $230,000 with a 4-year service life and an estimated $3,000 residual value was purchased. It was also estimated that the machine would produce 50,000 units during its life. The actual units produced during its first 2 years of operation were 9,000 and.

173. Robertson Company exchanged a used machine for a new machine. The old machine cost $80,000, and the new one had a cash price of $95,000. Robertson had recorded a total of $75,000 depreciation on the old machine and was allowed a $4,500 trade-in allowance. This transaction has commercial substance..

156. On July 1, 2014, Delta Company purchased and placed in service a machine that cost $360,000. Delta estimated the service life to be 5 years or 25,000 units of output, with an estimated residual value of $6,000. During 2014, 2,600 units were produced. Prepare the necessary December 31, 2014, adjusting.

146. Chervinski Industries recently paid $460,000 to buy a building that has an estimated useful life of 40 years and a residual value of $116,000. Calculate the depreciation expense for the third year after acquisition using double-declining-balance depreciation. Assume a full year of depreciation in the first year.     .

21. Depreciation measures the decline in market value of an asset. 22. Because depreciation is based on predictions of residual value and useful life, depreciation is an estimate. 23. On the balance sheet, it is not necessary to report both the cost and the accumulated depreciation of an asset. 24. Accumulated depreciation represents.

178. On April 1, 2015, Sagan Realty disposed of an automobile that had cost $50,000 on January 1, 2013. The automobile had a residual value of $8,000, and a useful life of 5 years. The accounting records showed accumulated depreciation for this asset of $16,800 at December 31, 2014. The.

167. Great Coast Construction (GCC) exchanged a three-year-old excavator for a new excavator that had a list price of $63,000, which was its fair value. The old excavator originally cost $85,000 and has accumulated depreciation of $45,000 to the date of exchange. In addition to the $45,000 trade-in given for.