Accounting for natural resources is similar to accounting for fixed assets. Which of the following is one of the ways natural resources are different from fixed assets? a. Natural resources are intangibles. b. Natural resources are accounted for using the straight-line depreciation method. c. None of the types of natural resources has a residual value. O d. Most natural resources can generally be replaced or restored only by an act of nature. An extraordinary repair is an expenditure that a. increases efficiency or productivity of an asset. b. adds a new or major component to the asset. c. keeps an asset in normal operating condition. O d. extends the asset's useful life. A patent has a legal life of 20 years. On January 1, Alpha Company acquires a patent that has a remaining legal life of 15 years. The company expects to receive economic benefits from the patent for only 5 years. How many years of amortization expense will the company have? a. 15 years Ob. 20 years O c. 5 years O d. Number of years cannot be determined. If a company did NOT correctly record all the costs necessary to acquire an asset and prepare it for use, what affect could this have on the financial statements? O a. The costs would be expensed, so income would be lower in the current period. b. The costs would be expensed, so income would be higher in the current period. c. Revenues would be higher so income would be higher in the current period. Od. The costs would be reported on the balance sheet, so income would be higher in the current period. American Mining purchased a gold mine in Nevada for $2,500,000. The estimated residual value is $200,000. It is estimated that there are 2,300,000 ounces of gold in the mine. What will the amount of depletion be in March if it extracts 1,000 ounces of gold from the mine? a $108.70 O b. $1,087 c. $1,000 O d. $100 An impairment of an asset may be due to which of the following? a. The FASB determining that the asset is impaired b. The maintenance expense of the asset being higher than expected Oc. Too little depreciation expense being recorded in previous years Od. The replacement cost of the asset increasing Which of the following statements about intangible assets is true? a. The right to the exclusive use of a distinctive name, phrase, or symbol is called a franchise. b. A patent expires after 15 years. c. Goodwill is considered to have an indefinite life unless it is found to be impaired. Od. The legal life of a copyright is 20 years