Chapter 10 Review - M/C

A company purchased a tract of land for its natural resources at a cost of $1,000,000. It expects to harvest 5,000,000 board feet of timber from this land. The salvage value of the land is expected to be $200,000. The depletion expense per board foot of timber is:

$0.16.

A company discarded a computer system originally purchased for $8,950. The accumulated depreciation was $6,250. The company should recognize a (an):

$2,700 loss.

Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $156,000. The machine's useful life is estimated to be 5 years, or 160,000 units of product, with a $4,000 salvage value. During its second year, the machine produces 25,600 units of product. Determine the machines' second year depreciation under the straight-line method.

$30,400.

Mohr Company purchases a machine at the beginning of the year at a cost of $41,000. The machine is depreciated using the straight-line method. The machine's useful life is estimated to be 8 years with a $3,000 salvage value. Depreciation expense in year 2 is:

$4,750

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the first year of its useful life using the double-declining-balance method?

$680.

A company had average total assets of $945,000. Its gross sales were $1,104,000 and its net sales were $950,000. The company's total asset turnover equals:

1.01.

Spears Co. had net sales of $50,404 million. Its average total assets for the period were $16,002 million. Spears' total asset turnover equals:

3.15.

Total asset turnover is used to evaluate:

A company's ability to use assets efficiently and effectively to generate sales.

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:

A debit to Cash of $42,000.

The depreciation method that produces more depreciation expense during the early years of an asset's life and less expense in the later years is a(n):

Accelerated depreciation method.

Land improvements are:

Additions to land that have limited useful lives.

Holding 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.

Intangible assets do not include:

Land held as an investment.

Which of the following is not classified as a plant asset?

Patent.

The term inadequacy refers to:

The inability of a plant asset to meet its demands