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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 11, Problem 9MC
Textbook Problem
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The estimated economic life of an asset is also known as ________.

A. residual value

B. book value

C. salvage life

D. useful life

To determine

Introduction:

Depreciation is the process of allocating the cost of a tangible asset over its useful life, or the period of time that the business believes it will use the asset to help generate revenue.

To choose:

The correct option.

Explanation of Solution

Explanation for correct answer:

The useful life is the time period over which an asset cost is allocated. Basically, it’s the length of time the asset will be productively used within operations.

Useful life and salvage value are estimates made at the time an asset is placed in service. It is common and expected that the estimates are inaccurate with the uncertainty involved in estimating the future. Sometimes, however, a company may attempt to take advantage of estimating salvage value and useful life to improve earnings. A larger salvage value and longer useful life decrease annual depreciation expense and increase annual net income

Explanation for incorrect answers:

  1. Residual value - The price the asset will sell for or be worth as a trade-in when its useful life expires...

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Chapter 11 Solutions

Principles of Accounting Volume 1
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Ch. 11 - How are intangible assets with an indefinite life...Ch. 11 - If the market value of goodwill is found to be...Ch. 11 - Which of the following represents an event that is...Ch. 11 - Which of the following is true regarding special...Ch. 11 - The loss in value from all causes within a...Ch. 11 - What is the difference between tangible and...Ch. 11 - Define intangible assets.Ch. 11 - What is the difference between a patent and a...Ch. 11 - What is goodwill, and how is it generated?Ch. 11 - For each of the following transactions, state...Ch. 11 - What amounts should be recorded as a cost of a...Ch. 11 - Describe the relationship between expense...Ch. 11 - Define natural resources.Ch. 11 - Explain the difference between depreciation,...Ch. 11 - Explain the differences between the process of...Ch. 11 - What is goodwill, and what are the unique aspects...Ch. 11 - What are some examples of special issues in...Ch. 11 - What is the difference between functional...Ch. 11 - Fombell, Incorporated has the following assets in...Ch. 11 - Jada Company had the following transactions during...Ch. 11 - Montello Inc. purchases a delivery truck for...Ch. 11 - Montello Inc. purchases a delivery truck for...Ch. 11 - Steele Corp. purchases equipment for $25,000....Ch. 11 - Calico Inc. purchased a patent on a new drug. The...Ch. 11 - Alfredo Company purchased a new 3-D printer for...Ch. 11 - Using the information from EA7, calculate...Ch. 11 - Santa Rosa recently purchased a new boat to help...Ch. 11 - Warriors Productions recently purchased a...Ch. 11 - The following intangible assets were purchased by...Ch. 11 - Sand River Sales has a fork truck used in its...Ch. 11 - New Carlisle, Incorporated, has the following...Ch. 11 - Johnson, Incorporated had the following...Ch. 11 - Montello Inc. purchases a delivery truck for...Ch. 11 - Montello Inc. purchases a delivery truck for...Ch. 11 - Steele Corp. purchases equipment for $30,000....Ch. 11 - Calico Inc. purchased a patent on a new drug it...Ch. 11 - Kenzie purchased a new 3-D printer for $450,000....Ch. 11 - Using the information from EB7, calculate...Ch. 11 - Ronson recently purchased a new boat to help ship...Ch. 11 - Warriors Production recently purchased a copyright...Ch. 11 - The following intangible assets were purchased by...Ch. 11 - Baglias Wholesale Trinkets has a 3-D printer used...Ch. 11 - Selected accounts from Phipps Corporations trial...Ch. 11 - Selected accounts from Han Corporations trial...Ch. 11 - During the current year, Alanna Co. had the...Ch. 11 - During the current year, Arkells Inc. made the...Ch. 11 - Jada Company had the following transactions during...Ch. 11 - Gimli Miners recently purchased the rights to a...Ch. 11 - Tree Lovers Inc. purchased 100 acres of woodland...Ch. 11 - Referring to PA7 where Kenzie Company purchased a...Ch. 11 - For each of the following unrelated situations,...Ch. 11 - Buchanan Imports purchased McLaren Corporation for...Ch. 11 - Montezuma Inc. purchases a delivery truck for...Ch. 11 - Garcia Co. owns equipment that costs $76,800, with...Ch. 11 - Colquhoun International purchases a warehouse for...Ch. 11 - Selected accounts from Hanna Corporations trial...Ch. 11 - Selected accounts from Boxwood Corporations trial...Ch. 11 - During the current year, Alanna Co. had the...Ch. 11 - During the current year, Arkells Inc. made the...Ch. 11 - Johnson, Incorporated, had the following...Ch. 11 - Underwoods Miners recently purchased the rights to...Ch. 11 - Tree Lovers Inc. purchased 2,500 acres of woodland...Ch. 11 - Montello Inc. purchases a delivery truck for...Ch. 11 - Prepare the assets section of the balance sheet as...Ch. 11 - For each of the following unrelated situations,...Ch. 11 - On May 1, 2015, Zoe Inc. purchased Branta Corp....Ch. 11 - Farm Fresh Agriculture Company purchased Sunny...Ch. 11 - Montezuma Inc. purchases a delivery truck for...Ch. 11 - Garcia Co. owns equipment that costs $150,000,...Ch. 11 - Urquhart Global purchases a building to house its...Ch. 11 - You are an accounting student at your local...Ch. 11 - Speedy delivery service recently hired a new...Ch. 11 - Speedy Delivery has a very lazy accountant. When...Ch. 11 - Malone Industries has been in business for five...Ch. 11 - Your family started a new manufacturing business...

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