accounting chapter 9

Which of the following is not properly classified as property, plant and equipment?

A truck held for resale by an automobile dealership

The Land account would include all of the following costs except

the cost of building a fence.

Which depreciation method is most frequently used in businesses today?

Straight-line

Depreciation is the process of allocating the cost of a plant asset over its useful life in a(n)

systematic and rational manner.

A factory machine was purchased for $25,000 on January 1, 2003. It was estimated that it would have a $5,000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. If the actual

$2,000.

On January 1, a machine with a useful life of five years and a residual value of $3,000 was purchased for $15,000. What is the depreciation expense for year 2 under the double-declining-balance method of depreciation.

$3,600

The book value of an asset is equal to the

asset's cost less accumulated depreciation.

The four subdivisions for plant assets are

land, land improvements, buildings, and equipment.

Equipment with a cost of $160,000 has an estimated salvage value of $15,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the

$36,250

Which one of the following items is not considered a part of the cost of a truck purchased for business use?

Truck license

The cost of a long-term asset is expensed

as the asset benefits the company.

Plant assets are ordinarily presented in the balance sheet

at cost less accumulated depreciation.

Land improvements should be depreciated over the useful life of the

land improvements.

A characteristic of a plant asset is that it is

used in the operations of a business.

In computing depreciation, salvage value is

an estimate of a plant asset's value at the end of its useful life.

Depreciation is a process of

cost allocation.

The balance in the Accumulated Depreciation account represents the

amount charged to expense since the acquisition of the plant asset.

Which of the following would not be included in the Equipment account?

Electricity used by the machine

A company purchased land for $72,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the cost principle, the cost of land would be r

$84,000.

The Carlton Company purchases a new delivery truck for $25,000. The sales taxes are $1,000. The logo of the company is painted on the side of the truck for $600. The truck license is $60. The truck undergoes safety testing for $110. What does Carlton reco

$26,710