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Chapter 09 - Plant and Intangible Assets
CHAPTER 9 NAME #
10-MINUTE QUIZ B SECTION
Indicate the best answer for each question in the space provided.
Use the following data for the four independent questions which follow:
On May 5, 2009, Lloyd purchased a machine for $84,000. The estimated life of the machine
was 10 years, with an estimated residual value of $10,000. The service life in terms of “output”
is estimated at 8,000 hours of operation.
1 Refer to the above data. Assume Lloyd uses straight-line depreciation with the half-year
convention. Depreciation expense to be recognized in 2009 (the year of purchase) is:
a $7,400. b $8,400. c $3,700. d Some other amount.
2 Refer to the data above. Assume Lloyd uses 200%-declining-balance depreciation with
the half-year convention. Depreciation expense to be recognized in 2010 (the second
year of ownership) is:
a $8,400. b $13,120. c $15,120. d Some other amount.
3 Refer to the data above. Assume Lloyd uses 150%-declining-balance depreciation with
the half-year convention. Depreciation expense to be recognized in 2009 (the year of
purchase) is:
a $8,400. b $6,300. c $12,600. d Some other amount.
4 Refer to the data above. Assume Lloyd uses the units-of-output method and that the
machine was in operation for 1,000 hours in 2009 and 1,800 hours in 2010. The book
value of the machine at December 31, 2010 is:
a $48,100. b $58,100. c $25,900. d Some other amount.
Chapter 09 - Plant and Intangible Assets
Financial and Managerial Accounting, 17e 9-9
CHAPTER 9 NAME #
10-MINUTE QUIZ C SECTION
On April 8, 2010, Dreamland Park purchased a ferris wheel for $300,000. The estimated life of the ferris
wheel was 10 years, with an estimated residual value of $60,000. The service life in terms of output is
estimated at 30,000 hours of operation.
Compute the depreciation on this ferris wheel in 2010 and 2011 using the following methods.
2010 2011
a Straight-line (with half-year convention) $________ $________
b 200%-declining-balance (with half-year convention) $________ $________
c 150%-declining-balance (with half-year convention) $________ $________
d Units-of-output method (hours of operation:
(2,600 in 2010 and 6,000 in 2011) $________ $________
e Straight-line (with depreciation calculated to the
nearest whole month) $________ $________
Chapter 09 - Plant and Intangible Assets
CHAPTER 9 NAME #
10-MINUTE QUIZ D SECTION
Louisville Farms, a breeder of racehorses, paid $432,000 cash for a prize-winning stallion on January 1,
2003. The stallion is depreciated on a straight-line basis, with depreciation for partial years rounded to the
nearest month. Estimated useful life was nine years, with no residual value. After owning the animal for
six years and five months, Louisville Farms sold the stallion on May 31, 2009, for cash of $85,000.
Depreciation had last been recorded on December 31, 2008.
a Compute to the nearest full month depreciation for the fractional period from January 1, 2009
to May 31 of 2009. $______________
b Compute the book value of the stallion at May 31, 2009, the date of sale.
$______________
c Compute the gain or loss on the sale of the stallion. $______________ (gain/loss)
d In the space provided below, prepare the journal entry to record the sale of the stallion on May 31,
2009. (Use Breeding Stock as the title of the asset account. Assume that depreciation to date of sale
already has been recorded.)
2009 General Journal
May 31
Computations
Chapter 09 - Plant and Intangible Assets
Financial and Managerial Accounting, 17e 9-11
SOLUTIONS TO CHAPTER 9 10-MINUTE QUIZZES
QUIZ A QUIZ B
QUIZ C
Year 1 Year 2
a Straight-line $12,000 $24,000
Year 1: [($300,000 - $60,000) x 1/10 x 1/2]
Year 2: ($240,000 x 1/10)
Chapter 09 - Plant and Intangible Assets
QUIZ D
a $20,000
Computations
a Depreciation for the five months ended May 31, 2009
[($432,000 cost 9 years) x 5/12] ................................................ $ 20,000
Chapter 09 - Plant and Intangible Assets
Financial and Managerial Accounting, 17e 9-13
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Assignment Guide to Chapter 9
Brief
Exercises
Exercises
Problems
Cases
Net
1-10
1-15
1
2
3
4
5
6
7
8
1
2
3
4
5
Time estimate (in minutes)
<15
<15
40
40
50
30
25
40
40
50
20
20
20
30
30
Difficulty rating
E
E
M
M
S
M
M
M
M
S
S
S
E
M
M
Learning Objectives:
1
2, 10, 15
√
1. Determine the cost of plant assets.
2. Distinguish between capital
expenditures and revenue
expenditures.
1
1, 2
3. Compute depreciation by the
straight-line and declining-balance
methods.
2, 3, 4, 5, 6,
7
1, 3, 4, 5,
6, 15
√
4. Account for depreciation using
methods other than straight-line or
declining-balance.
5, 10
13, 14
5. Account for the disposal of plant
assets.
6, 7
7, 9
6. Explain the nature of intangible
assets, including goodwill.
8
8, 10, 12
7. Account for the depletion of natural
resources.
9
11
8. Explain the cash effects of
transactions involving plant assets.
9, 12
