MyAccountingLab Access Code
3rd Edition
ISBN: 9780132952644
Author: Pearson
Publisher: Pearson College Div
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Chapter 6, Problem 2IE
1.
To determine
Explain they type of
2.
To determine
Explain the type of asset
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Which of the following are includable to the cost of property and equipment?
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In the summation (cost) method of valuation, which of the following steps is the ONLY one that a valuer would take in estimating value? a. Estimate the net operating income of the property. b. Determine the value of the land using the Assessed Annual Value and tax rate. c. Estimate the accrued depreciation. d. Calculate the acquisition price of the construction material used when the structure was built.
Based on the knowledge that you have learned from this unit and the relevant accounting standards, answer the following questions. Your answers must demonstrate your own understandings and applications of relevant accounting standards, but not a direct quote of the standards.
a.Use an example to explain what are included in the original cost of property, plant, and equipment when they are initially acquired.
b. What is the basic principle for valuing property, plant, and equipment acquired in exchange for other non-monetary assets?
c. Use an example to illustrate how gain or loss on disposal is calculated and recorded when an item of property, plant, and equipment is disposed of.
Chapter 6 Solutions
MyAccountingLab Access Code
Ch. 6 - For each of the following costs, indicate whether...Ch. 6 - Prob. 2YTCh. 6 - For each of the following, give the term for...Ch. 6 - On January 1, 2010, Access Company purchased a new...Ch. 6 - Prob. 5YTCh. 6 - An asset costs 50,000, has an estimated salvage...Ch. 6 - Prob. 7YTCh. 6 - Prob. 8YTCh. 6 - Prob. 1QCh. 6 - What is the difference between capitalizing and...
Ch. 6 - Prob. 3QCh. 6 - What does amortization mean?Ch. 6 - Prob. 5QCh. 6 - Prob. 6QCh. 6 - Prob. 7QCh. 6 - Prob. 8QCh. 6 - What is the residual value, or salvage value, of...Ch. 6 - What is the difference between depreciation...Ch. 6 - Prob. 11QCh. 6 - Explain the difference between the three...Ch. 6 - Prob. 13QCh. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - What types of costs related to long-term...Ch. 6 - How is a gain or loss on the disposal of an asset...Ch. 6 - How does goodwill arise?Ch. 6 - Prob. 19QCh. 6 - Prob. 20QCh. 6 - Prob. 21QCh. 6 - Prob. 1MCQCh. 6 - Prob. 2MCQCh. 6 - Prob. 3MCQCh. 6 - Prob. 4MCQCh. 6 - Prob. 5MCQCh. 6 - Prob. 6MCQCh. 6 - Prob. 7MCQCh. 6 - Prob. 8MCQCh. 6 - Prob. 9MCQCh. 6 - Prob. 10MCQCh. 6 - Prob. 1SEACh. 6 - Prob. 2SEACh. 6 - Prob. 3SEACh. 6 - Prob. 4SEACh. 6 - Prob. 5SEACh. 6 - Calculate depreciation expense: double-declining...Ch. 6 - Prob. 7SEACh. 6 - Prob. 8SEACh. 6 - Mining Expedition Company purchased a coal mine on...Ch. 6 - Unique Quality Recourses purchased a patent for...Ch. 6 - Analyze revenue and capital expenditures. (LO 4)....Ch. 6 - On January 1, 2010, the Premium Beer Corporation...Ch. 6 - Prob. 13SEACh. 6 - Prob. 14SEACh. 6 - Prob. 15SEBCh. 6 - Prob. 16SEBCh. 6 - Prob. 17SEBCh. 6 - Prob. 18SEBCh. 6 - Prob. 19SEBCh. 6 - Calculate depreciation expense: double-declining...Ch. 6 - Prob. 21SEBCh. 6 - Prob. 22SEBCh. 6 - Prob. 23SEBCh. 6 - Prob. 24SEBCh. 6 - Prob. 25SEBCh. 6 - Prob. 26SEBCh. 6 - Prob. 27SEBCh. 6 - Prob. 28SEBCh. 6 - Prob. 29EACh. 6 - Prob. 30EACh. 6 - Prob. 31EACh. 6 - Prob. 32EACh. 6 - Calculate depreciation under alternative methods....Ch. 6 - Soda Pop Bottling Company bought equipment for...Ch. 6 - Prob. 35EACh. 6 - Prob. 36EACh. 6 - Prob. 37EACh. 6 - Prob. 38EACh. 6 - Prob. 39EACh. 6 - Prob. 40EACh. 6 - Prob. 41EACh. 6 - Prob. 42EACh. 6 - Prob. 43EACh. 6 - Prob. 44EACh. 6 - Prob. 45EACh. 6 - Big Peach Athletics sold assets with an original...Ch. 6 - Prob. 47EACh. 6 - Prob. 48EACh. 6 - Prob. 49EBCh. 6 - Prob. 50EBCh. 6 - Prob. 51EBCh. 6 - Prob. 52EBCh. 6 - Calculate depreciation under alternative methods....Ch. 6 - Pristine Carpet Cleaner bought a new steamer for...Ch. 6 - Prob. 55EBCh. 6 - Prob. 56EBCh. 6 - Prob. 57EBCh. 6 - Prob. 58EBCh. 6 - Prob. 59EBCh. 6 - Prob. 60EBCh. 6 - Prob. 61EBCh. 6 - Prob. 62EBCh. 6 - Prob. 63EBCh. 6 - Prob. 64EBCh. 6 - Prob. 65EBCh. 6 - Prob. 66EBCh. 6 - Prob. 67EBCh. 6 - Prob. 68EBCh. 6 - Prob. 69PACh. 6 - Prob. 70PACh. 6 - Prob. 71PACh. 6 - Prob. 72PACh. 6 - Prob. 73PACh. 6 - Prob. 74PACh. 6 - Prob. 75PACh. 6 - Prob. 76PACh. 6 - Prob. 77PACh. 6 - Prob. 78PACh. 6 - Prob. 79PBCh. 6 - Prob. 80PBCh. 6 - Prob. 81PBCh. 6 - Prob. 82PBCh. 6 - Prob. 83PBCh. 6 - Prob. 84PBCh. 6 - Prob. 85PBCh. 6 - Elite Cleaners bought a new machine on January 1,...Ch. 6 - Prob. 87PBCh. 6 - Prob. 88PBCh. 6 - Prob. 1FSACh. 6 - Prob. 2FSACh. 6 - Prob. 1CTPCh. 6 - Prob. 2CTPCh. 6 - Prob. 3CTPCh. 6 - Prob. 1IECh. 6 - Prob. 2IECh. 6 - Prob. 3IE
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- Which of the following statements is (are) correct?a. Accumulated depreciation represents a cash fund beingaccumulated for the replacement of plant assets.b. The cost of a machine includes the cost of repairingdamage to the machine during the installation process.c. A company may use different depreciation methods inits financial statements and its income tax return.d. The use of an accelerated depreciation method causesan asset to wear out more quickly than does use of thestraight-line method.arrow_forwardCompanies that acquire intangible assets under IFRS may only utilize the revaluation model if the useful life of the asset can be easily identified. b. The intangible asset has a thriving market for sale. You have a reliable way of calculating the intangible asset's cost. D. The intangible property consists of money.arrow_forwardThe Home Depot financial statements appear in Appendix A at the end of this textbook. Use thesestatements to answer the following questions and indicate where in the financial statements youfound the information. a. What depreciation method does Home Depot use for buildings, furniture, fixtures, and equip-ment? What are the useful lives over which these assets are depreciated? b. From the notes to Home Depot ’s financial statements, what can you learn about the company’spolicy regarding impairment of plant assets?c. Locate Home Depot ’s balance sheet and find the section entitled “Property and Equipment, atcost.” As of January 31, 2010, determine the amount of the company’s investment in propertyand equipment and the amount of depreciation taken to date on those assets. Are these assets,taken as a whole, near the beginning or end of their estimated useful lives? Explain your answer.arrow_forward
- Why do we need to depreciate our property, plant, and equipment? (Discuss also the treatment of depreciation expense in the financial statements.)arrow_forwardWhy is depreciation expense recognized? Select one: a. To provide a better estimate of the market value of the depreciated assets. b. So that the balance sheet value of plant assets will more accurately reflect the replacement cost of the assets. c. To ensure that cash will be available at the end of the assets' useful life in order to replace it. d. To match the cost of the asset against the revenue using a reasonable allocation. method. Save AnswersNextarrow_forwardIndicate whether each of the following statements is true or false. When land with an old building is purchased as a future building site, the cost of removing the old building is part of the cost of the new building. Answer Special assessments for local improvements such as streetlights and sewers should be accounted for as land improvements. Answer Avoidable interest is the amount of interest cost that a company could theoretically avoid if it had not made expenditures for the asset.arrow_forward
- What costs are capitalized, or added to the asset account when acquiring property and equipment? A. Only the ticketed list price of the asset purchased. B. Any cost that is considered normal and necessary to get the asset into position and condition to be used. C. The lower of cost or net realizable value. D. Any of the above are allowed by U.S. GAAP as the cost to capitalize when acquiring property and equipment.arrow_forwardIn the present day, what types or classes of intangible assets are more popular than others? Cite examples by naming either the intangible asset or the company owning them. And when is it wise for a business to acquire investment properties instead of expanding operations by acquiring more PPE?arrow_forwardNeed answers ASAP... It approximates the present value of what will be received through ownership of the property, including the time value of money. a. Fair value b. Salvage value c. Market value d. Book valuearrow_forward
- In view of the investor, what is the best type of depreciation method? Justify your answer in terms of computation.arrow_forwardWhich of the following best describes depreciation?A It is a means of spreading the payment for the asset over its total estimated lifeB It represents the decline in the market value of the assetC It is a means of spreading the cost of an asset over its estimated useful lifeD It is a way of estimating the cash needed to replace the asset in the futurearrow_forwardWhen adjusting for depreciation on a building, which of the following is one effect of the adjustment? Select one: a. The building account is decreased. b. The cost of the building declines. c. The book value of the building declines. d. The market value of the building declines.arrow_forward
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