Expert Solutions

Plant assets refer to intangible assets that are used in the everyday operations of a business. 

true or false

A company purchased a mineral deposit for $800,000. It expects this property to produce 1,200,000 tons of ore and to have a salvage value of $50,000. In the current year, the company mined and sold 90,000 tons of ore. Its depletion expense for the current period is equal to:

$90,000 tons x ($800,000 - $50,000/1,200,000) = $56,250

A company had average total assets of $897,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover is equal to:

$1,000,000/$897,000 = 1.11

Total asset cost plus depreciation expense equals book value.

true or false?

The historical cost principle requires that an asset be recorded at the cash or cash equivalent amount that was given in exchange for it.

true or false?

Depreciation measures the actual decline in market value of an asset.

true or false

A company purchased a mineral deposit for $800,000. It expects this property to produce 1,200,000 tons of ore and to have a salvage value of $50,000. In the current year, the company mined and sold 90,000 tons of ore. Its depletion expense for the current period is equal to:

$90,000 tons x ($800,000 - $50,000/1,200,000) = $56,250