31. Natural resources are reported on the balance sheet at cost plus accumulated depletion.
32. When the usefulness of plant assets used to extract natural resources is directly related to the depletion of a natural resource, their costs are depreciated using the units-of-production method of depreciation, as long as the assets will not be moved to and used at another site when extraction of the natural resources is complete.
33. An ore deposit costing $800,000 is expected to produce 1,600,000 tons of ore. A total of 70,000 tons are mined and sold in the current year. The depletion expense for the current year is $35,000.
34. Intangible assets are certain nonphysical assets used in operations that confer on their owners long-term rights, privileges, or competitive advantage.
35. Goodwill is the amount by which a company's value exceeds the value of its individual assets and liabilities.
36. Since goodwill is intangible, it is amortized each year using the straight-line method, the same as other intangibles are amortized.
37. When the value of plant assets decline after acquisition, but before disposition, both GAAP and IFRS require companies to record those decreases as impairment losses.
38. A copyright gives its owner the exclusive right to publish and sell a musical, literary, or artistic work during the life of the creator plus 17 years.
Multiple Choice Questions
39. Plant assets are:
A. Tangible assets used in the operation of a business that have a useful life of more than one accounting period.
B. Current assets.
C. Held for sale.
D. Intangible assets used in the operations of a business that have a useful life of more than one accounting period.
E. Tangible assets used in the operation of business that have a useful life of less than one accounting period.
40. Plant assets are:
A. Current assets
B. Used in operations
C. Natural resources
D. Long-term investments
E. Intangible