Exam 8: Accounting for Long-Term Operational Assets

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On January 1,Year 1,Friedman Company purchased a truck that cost $48,000.The truck had an expected useful life of 100,000 miles over 8 years and an $8,000 salvage value.During Year 2,Friedman drove the truck 18,500 miles.Friedman uses the units-of-production method.What is depreciation expense in Year 2?

A) $8,880
B) $7,400
C) $6,000
D) $5,000

E) A) and B)
F) B) and C)

Premises

Responses

Intangible assets with indefinite useful lives will be not be amortized.

False

The cost of a natural resource should be expensed (depleted) over its useful life.

True

Plant assets are classified as long-term assets,while intangible assets are treated as current assets.

Intangible assets include patents,copyrights,and natural resources.

The cost of land should be depleted over its useful life.

Premises

Intangible assets with indefinite useful lives will be not be amortized.

The cost of a natural resource should be expensed (depleted) over its useful life.

Plant assets are classified as long-term assets,while intangible assets are treated as current assets.

Intangible assets include patents,copyrights,and natural resources.

The cost of land should be depleted over its useful life.

Responses

False

True

Correct Answer

Premises

Responses

Intangible assets with indefinite useful lives will be not be amortized.

The cost of a natural resource should be expensed (depleted) over its useful life.

Plant assets are classified as long-term assets,while intangible assets are treated as current assets.

Intangible assets include patents,copyrights,and natural resources.

The cost of land should be depleted over its useful life.