Author: Anonymous

An asset’s book value is computed as its original cost minus residual value, less accumulated depreciation.

Demolition costs to remove an old building from land purchased as a site for a new building are considered part of the cost of the new building.

A company purchased a 3-acre tract of land for a building site for $350,000. The company demolished the old building at a cost of $12,000, but was able to sell scrap from the building for $1,500. The cost of title transfer was $900 and attorney fees for reviewing the contract was $500. Property taxes paid were $3,000, of which $250 covered the period after the purchase date. The capitalized cost of the land is:

A gain is recognized on the disposal of an asset when the asset’s book value is greater than the consideration received.

The factors that need to be determined to compute depreciation are an asset’s:

Testing of new equipment should be included in the initial cost of the equipment on the balance sheet.

The cost of an intangible asset with a finite useful life is amortized.

An asset was acquired on January 1, 2021, for $78,000 with an estimated five-year life and $13,000 residual value. The company uses units-of-production depreciation and expects the asset to produce 20,000 units.  Actual production was: 2021 = 500 units; 2022 = 3,000 units; 2023 = 3,500 units; 2024 = 1,000 units. What amount will the company record for annual depreciation expense in 2023?

Cutter Enterprises purchased equipment for $72,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $6,000.Using the double-declining-balance method, annual depreciation expense for 2022 would be:

Property, plant, and equipment and intangible assets are long-term, revenue-producing assets.