Logout Open In App
Open In App
Warning: foreach() argument must be of type array|object, bool given in /var/www/html/web/app/themes/studypress-core-theme/template-parts/header/mobile-offcanvas.php on line 20

Chapter 8: 11QS (page 388)

Question: Identify the following assets a thorough I as reported on the balance sheet as intangible assets (IA), natural resources (NR), or other (O).

  1. Oil well

  2. Trademark

  3. Leasehold

  4. Gold mine

  5. Building

  6. Copyright

  7. Franchise

  8. Timberland

  9. Salt mine

Short Answer

Expert verified
  • Intangible assets: - Trademark, Leasehold, Copyright, Franchise
  • Natural Resources: - Oil well, Gold mine, Timberland, Salt mine
  • Other: - Building

Step by step solution

01

Definitions

Long-term assets: - Long-term assets that are used to produce or sell products or services. It usually lacks physical existence and has certain benefits.

Natural resources: -Natural resources are assets that are physically consumed when used. Examples are standing timber, mineral deposits, and oil and gas fields. Because they are consumed when used, they are often called wasting assets.

02

Solution

Intangible assets/ natural resources/ other

Oil well

Natural resource

Trademark

Intangible resource

Leasehold

Intangible resource

Gold mine

Natural resource

Building

Other

Copyright

Intangible resource

Franchise

Intangible resource

Timberland

Natural resource

Salt mine

Natural resource

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Flo Choi owns a small business and manages its accounting. Her company just finished a year in which a large amount of borrowed funds was invested in a new building addition as well as in equipment and fixture additions. Choi’s banker requires her to submit semi-annual financial statements so he can monitor the financial health of her business. He has warned her that if profit margins erode, he might raise the interest rate on the borrowed funds to reflect the increased loan risk from the bank’s point of view. Choi knows profit margin is likely to decline this year. As she prepares year-end adjusting entries, she decides to apply the following depreciation rule: All asset additions are considered to be in use on the first day of the following month. (The previous rule assumed assets are in use on the first day of the month nearest to the purchase date.)

Required

1. Identify decisions that managers like Choi must make in applying depreciation methods.

2. Is Choi’s rule an ethical violation, or is it a legitimate decision in computing depreciation?

3. How will Choi’s new depreciation rule affect the profit margin of her business?

A fleet of refrigerated delivery trucks is acquired on January 5, 2017, for \(830,000 with an estimated useful life of eight years and an estimated salvage value of \)75,000. Compute the depreciation expenses for the first three years using the double-declining-balance method.

Question: What is the difference between land and land improvements?

Onslow Co. purchases a used machine for \(178,000 cash on January 2 and readies it for use the next day at a \)2,840 cost. On January 3, it is installed on a required operating platform costing \(1,160, and it is further readied for operations. The company predicts the machine will be used for six years and have a \)14,000 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of. Required

  1. Prepare journal entries to record the machine’s purchase and the costs to ready and install it. Cash is paid for all costs incurred.
  2. Prepare journal entries to record depreciation of the machine at December 31 of (a) its first year in operations and (b) the year of its disposal.
  3. Prepare journal entries to record the machine’s disposal under each of the following separate assumptions: (a) it is sold for \(15,000 cash; (b) it is sold for \)50,000 cash; and (c) it is destroyed in a fire and the insurance company pays $30,000 cash to settle the loss claim.

Question: 1. Classify the following as either a revenue expenditure (RE) or a capital expenditure (CE).

  1. Paid \(40,000 cash to replace a compressor on a refrigeration system that extends its useful life by four years.

  2. Paid \)200 cash per truck for the cost of their annual tune-ups.

  3. Paid \(175 for the monthly cost of replacement filters on an air-conditioning system.

  4. Completed an addition to an office building for \)225,000 cash.

2. Prepare the journal entries to record transactions a and d of part 1
See all solutions

Recommended explanations on Business Studies Textbooks

Intermediate Accounting

Read Explanation

Managers

Read Explanation

Organizational Communication

Read Explanation

Business Development

Read Explanation

Strategic Analysis

Read Explanation

Business Case Studies

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free