Chapter 8 Online Lecture Assignment

1. Plant assets are: tangible assets used in a company's operations that have a useful life of more than one accounting period. 2. Zimmerman Auto sells new and used cars. Its assets are as follows: (1) the showroom building, a separate building used to service customer cars, and various parking lots, (2) a nearby acre of land not currently used by the auto dealership, (3) new and used cars and trucks for sale to customers, and (4) a car that is used to provide rides to customers who prefer to wait at home while their cars are serviced. The assets that are classified as plant assets on the company's balance sheet include: (1) and (4) 3. The acquisition cost of a plant asset does not include repair costs resulting from damage to the plant asset while it was being unpacked. 4. On January 1 Coopers Industries bought a parcel of land for use in its operations by paying the seller $100,000 in cash and signing a 5-year, 12 percent note payable in the amount of $400,000. In connection with the purchase of the land, Coopers incurred legal fees of $19,000, a real estate agent sales commission of $25,000, surveying fees of $1,000, and an appraisal fee of $5,000. The acquisition cost of the land is $550,000 5. The useful life of a new plant asset might be estimated based on the experience of others or on engineering studies and judgment if the company does not have past experience with a similar asset 6. On January 1, 2021, Truesdale, Incorporated, purchased a piece of machinery for use in operations. The total acquisition cost was $33,000. The machine has an estimated useful life of 3 years and a salvage value of $3,000. Using the straight-line method, the amount of depreciation that should be recorded during 2021, is approximately $10,000 7. On January 1, 2021, Truesdale, Incorporated, purchased a piece of machinery for use in operations. The total acquisition cost was $33,000. The machine has an estimated useful life of 3 years and a salvage value of $3,000. Using the straight-line method, the book value of the machinery at December 31, 2022, is approximately $13,000. 8. On January 1, 2021, Truesdale, Incorporated, purchased a piece of machinery for use in operations. The total acquisition cost was $33,000. The machine was expected to produce a total of 60,000 units during its life. The machine actually produced 16,000 units during 2021, 23,000 units during 2022, and 21,000 units during 2023. The machine has a salvage value of $3,000. Using the units-of-production method, the amount of depreciation that should be recorded during 2022, is approximately $11,500. 9. On January 1, 2021, Truesdale, Incorporated, purchased a piece of machinery for use in operations. The total acquisition cost was $33,000. The machine has an estimated useful life of 3 years and a salvage value of $3,000. Using the double-declining balance method, depreciation for 2021 is approximately $22,000. 10. The double-declining-balance and straight-line depreciation methods: produce the same amount of total depreciation over an asset's useful life. 11. On October 1, Illini Company purchased a truck for $42,000. The truck is expected to have a salvage value of $3,000 at the end of its 3-year useful life. If the company uses the straight-line method, the depreciation expense recorded during the year ending December 31, will be: $3,250. 12. are additional costs of plant assets that provide benefits extending beyond the current period and increase or improve the type or amount of service an asset provides. Capital expenditures. 13. Total asset turnover is computed as: Net sales divided by average total asset 14. The company’s total asset turnover is closest to: 8.50