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Exam 3 Study Set Questions with Solutions
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Exam of 5 pages for the course CALA at CALA (Exam 3 Study Set)
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Exam 3 Study SetPlant assets are: - answer tangible assets used in a company's operations that have a
useful life of more than one accounting period.
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: - answer(1) and (4)
The acquisition cost of a plant asset does not include - answer repair costs resulting
from damage to the plant asset while it was being unpacked.
On January 1 Coopers Industries bought a parcel of land for use in its operations by
paying the seller $100,000 in cash and signing a 5-year, 12 percent note payable in the
amount of $400,000. In connection with the purchase of the land, Coopers incurred
legal fees of $19,000, a real estate agent sales commission of $25,000, surveying fees
of $1,000, and an appraisal fee of $5,000. The acquisition cost of the land is -
answer$550,000
Worthington, Incorporated, paid $90,000 to acquire land, land improvements, and a
building. The company obtained two appraisals: The land was appraised at $30,000, the
land improvements were appraised at $10,000, and the building was appraised at
$60,000. The allocation of the cost of the purchase result in cost figures of -
answer$27,000 for the land, $9,000 for the land improvements, and $54,000 for the
building.
The useful life of a new plant asset _____. - answermight 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.
On January 1, 2021, Truesdale, Incorporated, purchased a piece of machinery for use
in operations. The total acquisition cost was $33,000. The machine has an estimated
useful life of 3 years and a salvage value of $3,000. Using the straight-line method, the
amount of depreciation that should be recorded during 2021, is approximately -
answer$10,000
On January 1, 2021, Truesdale, Incorporated, purchased a piece of machinery for use
in operations. The total acquisition cost was $33,000. The machine has an estimated
, useful life of 3 years and a salvage value of $3,000. Using the straight-line method, the
book value of the machinery at December 31, 2022, is approximately - answer$13,000
On January 1, 2021, Truesdale, Incorporated, purchased a piece of machinery for use
in operations. The total acquisition cost was $33,000. The machine was expected to
produce a total of 60,000 units during its life. The machine actually produced 16,000
units during 2021, 23,000 units during 2022, and 21,000 units during 2023. The
machine has a salvage value of $3,000. Using the units-of-production method, the
amount of depreciation that should be recorded during 2022, is approximately -
answer$11,500
On January 1, 2021, Truesdale, Incorporated, purchased a piece of machinery for use
in operations. The total acquisition cost was $33,000. The machine has an estimated
useful life of 3 years and a salvage value of $3,000. Using the double-declining balance
method, depreciation for 2021 is approximately - answer$22,000
On January 1, 2021, Truesdale, Incorporated, purchased a piece of machinery for use
in operations. The total acquisition cost was $33,000. The machine has an estimated
useful life of 3 years and a salvage value of $3,000. Using the double-declining balance
method, depreciation for 2023 is approximately - answer$667
The double-declining-balance and straight-line depreciation methods: - answerproduce
the same amount of total depreciation over an asset's useful life.
On October 1, Illini Company purchased a truck for $42,000. The truck is expected to
have a salvage value of $3,000 at the end of its 3-year useful life. If the company uses
the straight-line method, the depreciation expense recorded during the year ending
December 31, will be: - answer$3,250
A company used straight-line depreciation for equipment that cost $12,000, had a
salvage value of $2,000, and a 5-year useful life. At the beginning of year 4 of its useful
life, the estimate of the salvage value was reduced to $1,200 and its total useful life was
increased to 6 years. The amount of depreciation that will be recorded during each of
the remaining years of its useful life is: - answer$1,600
_____ 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.
- answerCapital expenditures
On August 4, Armstrong Trucking, Incorporated, paid $4,500 to replace the engine in
one of its trucks. Complete the necessary journal entry by selecting the account names
from the drop-down menus and entering the dollar amounts in the debit or credit
columns. - answerDebit trucks and credit cash
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,
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