Accounting SmartBook Chapter 10

Straight-line depreciation can be calculated by taking:

(cost minus salvage value)/useful life

Plant assets should be recorded at cost, including all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use. This would include which of the following costs? (Check all that apply.)

Assembling Shipping charges Testing

_________ are expenditures that make a plant asset more efficient or productive, but do not always increase an asset's useful life.

Betterments

Determine which of the following expenses are considered revenue expenditures related to a company vehicle. (Check all that apply.)

Dent repair Car wash Oil change

______ is the process of allocating the cost of a plant asset to expense while it is in use.

Depreciation

True or false: The cost of plant assets should include all of the normal and reasonable expenditures necessary to get the asset in place and ready for its intended use, including repairs to damages incurred after installation

False

Book value is less than the selling price

Gain on sale of asset

On December 31, Briar Co. disposed of a piece of equipment that cost $6,000 with accumulated depreciation of $4,500. The entry to record this disposal would include a debit to which account and for how much?

Loss on Disposal of Equipment for $1,500

Book value is greater than the selling price

Loss on sale of asset

Forward Co. discarded a machine that cost $5,000 and was fully depreciated. The entry to record this transaction would include a credit to the _________ account.

Machinery

Book value is equal to the selling price

No gain or loss recognized

_______ are expenditures that keep an asset in good operating condition. They are necessary if an asset is to perform to expectations over its useful life.

Ordinary repairs

____________ assets purchased as a group in a single transaction for a lump-sum price are allocated the purchase price based on their relative market values.

Plant

____ assets are assets used in a company's operations that have a useful life of more than one accounting period.

Plant or Fixed

_________ expenditures are additional costs of plant assets that do not materially increase the asset's life or capabilities.

Revenue

The cost at which a company records purchases of machinery and equipment should include which of the following? (Check all that apply.)

Taxes Purchase price Installation Shipping fees

A company owns an asset that is fully depreciated. The asset is no longer being used in operations and has no market value. The company has decided to ________ the asset by recording an entry to remove it from the balance sheet.

discard

Assets that increase the benefits of land, have a limited useful life, such as parking lots and lighting systems, are called:

land improvements

The purchase of a group of plant assets for one price is called a ______ purchase.

lump-sum