Chapter 9 Plant and Intangible Assets 416 Finx, Inc, purchased a truck for $40,000. The truck is expected to be driven 15,000 miles per year five-year period and then sold for approximately $5,000. Determine depreciation for the EF EXERCISE 9.5 over actually driven 16,000 miles. (Round depreciation per mile for the units-of-outpst method to the bearest whole cent) Output Depreciation Alexander Company purchased a piece of equipment for $14,000 and depreciated it for three years LO9-3, LO9-5 At the end of the third year, Alex decided to upgrade to equipment with increased capacity and sold the original piece of equipment for $7,500. Calculate the gain or loss on the disposal at the end of the third year BRIEF EXERCISE 9.6 RCISE 9.6 over a five-year estimated life with an expected residual value at the end of five years of $2,000. Disposal of Plant Asset Taylor Company purchased equipment for $27,500. It depreciated the equipment over a five-year BRIEF EXERCISE 9.7 life by the double-declining-balance method until the end of the second year, at which time the asset was sold for $8,300. Caleulate the gain or loss on the sale at the end of the second year LO9-3, LO9-5 isposal of Plant Asset Hunt Company is considering purchasing a competing company in order to expand its market share. Estimates of the excess of the value of the individual assets, less liabilities to be assumed range from $50,000 to $60,000, depending on the manner in which that excess is calculated. Hunt believes it can purchase the competitor for a direct cash outlay of $700,000, which is only $25,000 more than the value of the individual assets less the liabilities that Hunt will assume. Assuming Hunt makes the purchase for $700,000, at what amount should goodwill be recorded? Briefly explain your answer 09-6 RIEF EXERCISE 9.8 odwill Miller Mining acquired rights to a tract of land with the intent of extracting from the land a valu- 9-7 IEF EXERCISE 9.9able mineral.The cost of the rights was $2,500,000 and an estimated 10,000 tons of the mineral are expected to be extracted. Assuming that 1,600 tons of the mineral are ctually extracted in the first year, determine the amount of depletion expense that should be recognized for that year ural Resources M. C. Jones purchased a truck for $30,500 to be used in his business. He is considering depre EF EXERCISE 9.10 ciating the truck by two methods: units-of-output (assuming total miles driven of 80,000) and native Depreciation double-declining balance (assuming a five-year useful life). The truck is expected to be sold for approximately $6,500 at the end of its useful life. Prepare a comparison of the first year's depre- ciation expense that would be recognized by Jones under these methods, assuming the truck was actually driven 10,000 miles in the first year. Briefly state why the difference between the two is -4 ods so great connect Exercises Assume that you recently applied for a student loan to go to graduate school. As part of the appli- cation process, your bank requested a list of your assets. Aside from an extensive CD collection , LO9-3 CISE 9.1 Alexander Company purchased a piece of equipment for $14,000 and depreciated it for three years over a five-year estimated life with an expected residual value at the end of five years of $2,000. At the end of the third year, Alex decided to upgrade to equipment with increased capacity and sold the original piece of equipment for $7,500. Calculate the gain or loss on the disposal at the end of the third year. .6 uenhnnod equinment for 27 500 It denreciated the equipment over a five-year