ACING MBA 510 MOD 5 WITH THE LATEST A+ QUESTIONS AND
ANSWERS STUDY COMPANION.
tangible assets used in a company's operations that have a useful life of more
than one accounting period.
plant assets
Zimmerman Auto sells new and used cars. Its assets are as follows: (1) the
showroom building, a separate building used to service customer cars, and
various parking lots, (2) a nearby acre of land not currently used by the auto
dealership, (3) new and used cars and trucks for sale to customers, and (4) a car
that is used to provide rides to customers who prefer to wait at home while their
cars are serviced. The assets that are classified as plant assets on the company's
balance sheet include:
1 and 4
might be estimated based on the experience of others or on engineering studies
and judgment if the company does not have past experience with a similar asset.
the useful life of a plant asset
__________ ____________ are additional costs of plant assets that
provide benefits extending beyond the current period and increase or improve
the type or amount of service an asset provides.
capital expenditures
On December 29, 2021, Patel Products, Incorporated, sells a delivery van that
cost $20,000. The equipment had accumulated depreciation of $16,000 at
December 31, 2020. Annual depreciation on this equipment is $2,000 computed
using straight-line depreciation.
Complete the necessary journal entry to bring the accumulated depreciation up-
to-date
depreciation expense: debit 2,000
accumulated depreciation: credit 2,000
Exclusive right granted to its owner to manufacture and sell an item.
patent
,Gives its owner the exclusive right to publish and sell musical, literary, or artistic
work over a defined period of time.
copyright
The amount by which a company's value exceeds the value of its individual
assets and liabilities.
goodwill
Which of the following items are plant assets?
-buildings used for operations
-equipment used in operations
The process of allocating the cost of a plant asset to expense while it is in use is
called
depreciation
The factors necessary to compute depreciation include
cost
salvage value
useful life
______________ value, also called residual value or scrap value, is an estimate of
the asset's value at the end of its useful life
salvage value
The ___________ life of a plant asset is the length of time it is productively used
in a company's operations
useful life
assets used in a company's operations that have a useful life of more than one
accounting period
plant assets
Straight-line depreciation can be calculated by taking:
cost - salvage value/useful life
Which of the following items related to depreciating equipment would be found
on a company's income statement?
depreciation expense - equipment
, Accumulated depreciation is recorded on which of the following financial
statements?
balance sheet
Depreciation expense is reported as a decrease on which of the following
financial statements?
income statement
On January 2, Dice Co. purchases a mixing machine for $25,500. The machine is
expected to last four years and have a salvage value of $5,500. Assuming the
company uses the straight-line method, depreciation expense should be:
$5,000 per year
Ring Co. owns a delivery van that was purchased two years ago for $25,000. Ring
has depreciated the van for two years at a straight-line amount of $4,000 per year.
The book value of this van at the end of the second year would be
$17,000
(4,000 for 2 years means 4,000 EACH year, so 25,000 - 8,000 = 17,000)
The asset's acquisition costs minus its accumulated depreciation is called:
book value
Accumulated depreciation is a __________ asset account (one that is linked with
the plant asset account, but has an opposite normal balance) and is reported on
the balance sheet.
contra
The method of depreciation that charges a varying amount to depreciation
expense for each period depending on its usage is called the ___________
method.
units of production
Juno Co. purchased a machine for $10,000 and estimates it will use the machine
for three years with a $2,000 salvage value. It expects to produce a total of 8,000
units as follows: 3,000 during year one; 2,500 during year two; and 2,500 during
year three. Using the units-of-production depreciation method, compute the
machine's first year depreciation expense.
ANSWERS STUDY COMPANION.
tangible assets used in a company's operations that have a useful life of more
than one accounting period.
plant assets
Zimmerman Auto sells new and used cars. Its assets are as follows: (1) the
showroom building, a separate building used to service customer cars, and
various parking lots, (2) a nearby acre of land not currently used by the auto
dealership, (3) new and used cars and trucks for sale to customers, and (4) a car
that is used to provide rides to customers who prefer to wait at home while their
cars are serviced. The assets that are classified as plant assets on the company's
balance sheet include:
1 and 4
might be estimated based on the experience of others or on engineering studies
and judgment if the company does not have past experience with a similar asset.
the useful life of a plant asset
__________ ____________ are additional costs of plant assets that
provide benefits extending beyond the current period and increase or improve
the type or amount of service an asset provides.
capital expenditures
On December 29, 2021, Patel Products, Incorporated, sells a delivery van that
cost $20,000. The equipment had accumulated depreciation of $16,000 at
December 31, 2020. Annual depreciation on this equipment is $2,000 computed
using straight-line depreciation.
Complete the necessary journal entry to bring the accumulated depreciation up-
to-date
depreciation expense: debit 2,000
accumulated depreciation: credit 2,000
Exclusive right granted to its owner to manufacture and sell an item.
patent
,Gives its owner the exclusive right to publish and sell musical, literary, or artistic
work over a defined period of time.
copyright
The amount by which a company's value exceeds the value of its individual
assets and liabilities.
goodwill
Which of the following items are plant assets?
-buildings used for operations
-equipment used in operations
The process of allocating the cost of a plant asset to expense while it is in use is
called
depreciation
The factors necessary to compute depreciation include
cost
salvage value
useful life
______________ value, also called residual value or scrap value, is an estimate of
the asset's value at the end of its useful life
salvage value
The ___________ life of a plant asset is the length of time it is productively used
in a company's operations
useful life
assets used in a company's operations that have a useful life of more than one
accounting period
plant assets
Straight-line depreciation can be calculated by taking:
cost - salvage value/useful life
Which of the following items related to depreciating equipment would be found
on a company's income statement?
depreciation expense - equipment
, Accumulated depreciation is recorded on which of the following financial
statements?
balance sheet
Depreciation expense is reported as a decrease on which of the following
financial statements?
income statement
On January 2, Dice Co. purchases a mixing machine for $25,500. The machine is
expected to last four years and have a salvage value of $5,500. Assuming the
company uses the straight-line method, depreciation expense should be:
$5,000 per year
Ring Co. owns a delivery van that was purchased two years ago for $25,000. Ring
has depreciated the van for two years at a straight-line amount of $4,000 per year.
The book value of this van at the end of the second year would be
$17,000
(4,000 for 2 years means 4,000 EACH year, so 25,000 - 8,000 = 17,000)
The asset's acquisition costs minus its accumulated depreciation is called:
book value
Accumulated depreciation is a __________ asset account (one that is linked with
the plant asset account, but has an opposite normal balance) and is reported on
the balance sheet.
contra
The method of depreciation that charges a varying amount to depreciation
expense for each period depending on its usage is called the ___________
method.
units of production
Juno Co. purchased a machine for $10,000 and estimates it will use the machine
for three years with a $2,000 salvage value. It expects to produce a total of 8,000
units as follows: 3,000 during year one; 2,500 during year two; and 2,500 during
year three. Using the units-of-production depreciation method, compute the
machine's first year depreciation expense.
