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Exam 8: Reporting and Analyzing Long-Term Assets

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Question 81

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Spears Co.had net sales of $35,400 million.Its average total assets for the period were $14,700 million.Spears' total asset turnover equals:

A) 0.42.
B) 0.35.
C) 1.48.
D) 2.41.
E) 3.54.

F) A) and D)
G) B) and E)

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Question 82

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________ 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 83

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Martinez owns machinery that cost $87,000 with accumulated depreciation of $40,000.The company sells the machinery for cash of $42,000.The journal entry to record the sale would include:

Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $87,000.The machine's useful life is estimated to be 5 years,or 400,000 units of product,with a $7,000 salvage value.During its second year,the machine produces 84,500 units of product.Determine the machines' second year depreciation under the units-of-production method.

What are the general accounting procedures for recording asset disposals?

Companies that have a relatively large amount invested in assets to generate a given level of sales are considered capital-intensive.

Betterments are:

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000.The machine's useful life is estimated to be 5 years,or 300,000 units of product,with a $15,000 salvage value.During its first year,the machine produces 64,500 units of product.What journal entry would be needed to record the machines' first year depreciation under the units-of-production method?

Duncan reported net sales of $2,523 million and average total assets of $1,476 million.Its total asset turnover equals 0.59.

Colvin Enterprises purchased a depreciable asset on October 1,Year 1 at a cost of $100,000.The asset is expected to have a salvage value of $20,000 at the end of its five-year useful life.If the asset is depreciated on the double-declining-balance method,the asset's book value on December 31,Year 2 will be:

Asset turnover is computed by dividing net sales by average total assets.

Revenue expenditures are also called balance sheet expenditures.

A copyright gives its owner the exclusive right to publish and sell a musical,literary,or artistic work during the life of the creator plus 70 years.

Fields Company purchased equipment on January 1 for $180,000.This system has a useful life of 8 years and a salvage value of $20,000.The company estimates that the equipment will produce 40,000 units over its 8-year useful life.Actual units produced are: Year 1 - 4,000 units; Year 2 - 6,000 units; Year 3 - 8,000 units; Year 4 - 5,000 units; Year 5 - 4,000 units; Year 6 - 5,000 units; Year 7 - 7,000 units; Year 8 - 3,000 units.What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

Define plant assets and identify the four primary issues in accounting for them.

Extraordinary repairs:

Extraordinary repairs are expenditures extending the asset's useful life beyond its original estimate,and are capital expenditures because they benefit future periods.

The depreciation method that charges the same amount of expense to each period of the asset's useful life is called:

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 ________.

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.