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Exam 9: Long-Term Assets: Fixed and Intangible

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Question 111

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Classify each of the following costs associated with long-lived assets as one of the following: -Supplies (materials) used to test new equipment A)Land improvements B)Buildings C)Land D)Machinery and equipment

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Question 112

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The depreciation method that does not use residual value in calculating the first year's depreciation expense is

A) straight-line
B) units-of-output
C) double-declining-balance
D) sum-of-the-digits

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Question 113

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Champion Company purchased and installed carpet in its new general offices on March 31 for a total cost of $18,000. The carpet is estimated to have a 15-year useful life and no residual value.​ (a)Prepare the journal entries necessary for recording the purchase of the new carpet.(b)Record the December 31 adjusting entry for the partial-year depreciation expense for the carpet assuming that Champion Company uses the straight-line method.

A number of major structural repairs completed at the beginning of the current fiscal year at a cost of $1,000,000 are expected to extend the life of a building 10 years beyond the original estimate. The original cost of the building was $6,552,000, and it has been depreciated by the straight-line method for 25 years. Estimated residual value is negligible and has been ignored. The related accumulated depreciation account after the depreciation adjustment at the end of the preceding fiscal year is $4,550,000.(a)What has the amount of annual depreciation been in past years? (b)What was the original life estimate of the building? (c)To what account should the $1,000,000 be debited? (d)What is the book value of the building after the extraordinary repairs have been made? (e)What is the expected remaining life of the building after the extraordinary repairs have been made? (f)What is the amount of straight-line depreciation for the current year, assuming that the repairs were completed at the very beginning of the current year? Round to the nearest dollar.

What would be the cost basis of a new machine with a purchase price of $109,000, with transportation costs of $12,000, installation costs of $5,000, and special acquisition fees of $6,000?

The journal entry for recording payment for the short-term lease of a fixed asset would

The cost of replacing an engine in a truck is an example of ordinary maintenance.

Intangible assets differ from property, plant, and equipment assets in that they lack physical substance.

A machine costing $185,000 with a 5-year life and $20,000 residual value was purchased January 2. Compute depreciation for each of the five years, using the double-declining-balance method.

On July 1, Harding Construction purchases a bulldozer for $228,000. The equipment has an 8-year life with a residual value of $16,000. Harding uses straight-line depreciation.(a) Calculate the depreciation expense and provide the journal entry for the first year ending December 31.(b) Calculate the third year's depreciation expense and provide the journal entry for the third year ending December 31.(c) Calculate the last year's depreciation expense and provide the journal entry for the last year.

Though a piece of equipment is still being used, the equipment should be removed from the accounts if it has been fully depreciated.

Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two categories

The method used to calculate the depletion of a natural resource is the straight-line method.

On December 31, Strike Company traded in one of its batting cages for another one that has a cost of $500,000. Strike receives a trade-in allowance of $11,000. The old equipment had an initial cost of $215,000 and has accumulated depreciation of $185,000. Depreciation has been recorded up to the end of the year. The difference will be paid in cash. What is the amount of the gain or loss on this transaction?

Which of the following is true?

Match each account name to the financial statement section (a-i) in which it would appear. -Loss on Disposal of Asset A)Current Assets B)Fixed Assets C)Intangible Assets D)Current Liability E)Long-Term Liability F)Owners' Equity G)Revenues H)Operating Expenses I)Other Income/Expense

Losses on the discarding of fixed assets are reported in the income statement.

Eagle Country Club has acquired a lot to construct a clubhouse. Eagle had the following costs related to the construction: Determine the cost of the club house to be reported on the balance sheet.

On December 31, Bowman Company estimated that goodwill of $80,000 was impaired. On June 1, a patent with an estimated useful economic life of 10 years was acquired for $252,000.​ Required: (a) Journalize the adjusting entry on December 31 for the impaired goodwill.(b) Journalize the adjusting entry on December 31 for the amortization of the patent rights.

The calculation for annual depreciation using the double-declining balance method is