1. Plant assets are defined as: A) Current assets. B) Tangible assets that have
ID: 2589797 • Letter: 1
Question
1. Plant assets are defined as: A) Current assets. B) Tangible assets that have a useful life of more than one accounting period and are used in the operation of a business. C) Intangible assets used in the opcrations of a business that have a useful life of more than one accounting period. D) Tangible assets used in the opcration of business that have a useful life of less than ono accounting period. E) Held for sale. 2. Marlow Company purchased a point of sale system on January 1 for S3,400. This system has a useful life of 10 years and a salvage value of S400. What would be the book value of the asset at the end of the first year of its useful life using the double-declining-balance method? A) $680 B) S2,320 C) S2,720. D) $600 E) S300 Answer Questions 3-4 using the information below: Riverboat Adventures pays $310,000 plus S15,000 in closing costs to buy out a competitor. The real estate consists of land appraised at S35,000, a building appraised at S105,000, and paddleboats appraised at $210,000 3. Compute the cost that should be allocated to the building. A) $97,500 B) S105,000 C) $89,178 D) $140,000 E) $93,000 4. Compute the cost that should be allocated to the land. A) $97,500 B) S140,000 C) S32,500 D) $31,000 E) $93,000Explanation / Answer
Plant assets are defined as :
Solution: Tangible assets that have a useful life of more than one accounting period and are used in the operation of a business
Explanation: Plant assets are defined as tangible assets used in the business that have a useful life of more than one accounting
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Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the book value of the asset at the end of the Frst year of its useful life using the double-declining-balance method?
Solution: $2,720
Working: Depreciation Expense = Book Value * Double Straight-line Rate
= 3400 * (2*10%) = $680
$3400 - $680 = $2720
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Riverboat Adventures pays $310,000 plus $15,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $35,000, a building appraised at $105,000, and paddleboats appraised at $210,000.
1) Compute the cost that should be allocated to the building
Solution: $97,500
Explanation: $105,000/$350,000 = 0.30
0.30 * $325,000 = $97,500
2) Compute the cost that should be allocated to the land
Solution: $325,500
Explanation: $35,000/$350,000 = 0.10
0.10 * $325,000 = $325,500
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