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Exam 9: Long-Lived Tangible and Intangible Assets

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Question 61

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The Buddy Burger Corporation has $3.5 million in long-lived assets and has an accumulated depreciation account of $1.1 million.Which of the following statements is true?

A) The book value of long-lived assets is $2.4 million.
B) The market value of long-lived assets is $3.5 million.
C) The carrying value of long-lived assets is $3.5 million.
D) The resale value of long-lived assets is $2.4 million.

E) A) and C)
F) A) and B)

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Question 62

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During 2014,Company X sells 500,000 units for $8 each.Sales discounts are $100,000 and sales returns and allowances are $300,000.The company reported a total of $710,000 in fixed assets on January 1,2014 and $890,000 in fixed assets on December 31,2014. a.Calculate net sales revenue. b.Calculate average fixed assets. c.Calculate the fixed asset turnover ratio. d.Assume the 2014 fixed asset turnover ratio was lower than the 2013 ratio.Describe one circumstance where this change would indicate bad news and one circumstance where this change would be consistent with good news.

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a.Net sales revenue = (500,000 x $8)- $1...

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Question 63

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When a company sells a long-lived asset,stockholders' equity will change by the:

At the beginning of 2013,your company buys a $30,000 piece of equipment that it expects to use for 4 years.The company expects to produce a total of 200,000 units.The equipment has an estimated residual value of $2,000. a.Find the depreciable cost. b.Find the depreciation expense per year under the straight-line method. c.Prepare a depreciation schedule under the straight-line method. d.Find the depreciation rate per unit under the units-of-production method. e.Prepare a depreciation schedule under the units-of-production method if,44,000 units are produced in one year,53,000 units in year two,51,000 units in year three,and 52,000 units in year four.

On January 1,2016,Horton Inc.sells a machine for $23,000.The machine was originally purchased on January 1,2014 for $40,000.The machine was estimated to have a useful life of 5 years and no residual value.Horton uses straight-line depreciation. a.Prepare the journal entry to record the sale. b.If the company had used the double-declining balance method,how would this have affected any gain or loss on the sale?

Tax accounting and financial accounting use the same depreciation calculations and there are no differences in the results between the two accounting systems.

Which of the following is not a characteristic of tangible long-lived assets?

Use the information above to answer the following question.What is the depreciation expense for 2014?

The calculation for depletion of natural resources is similar to the calculation for units-of-production depreciation.

The right to exclude others from making or using an invention is a

The straight-line depreciation method and the double-declining-balance depreciation method

A company sells a piece of equipment half-way through the accounting period.The straight-line rate of depreciation on the equipment is $40,000 per year.Before recording the asset sale,the company should debit:

Use the information above to answer the following question.If the company sells the machine at the end of 5 years and receives $11,500,the journal entry to record the sale will include which of the following?

For each of the following,indicate if the asset would be depreciated,amortized or neither. D - Depreciate A - Amortize N - Neither _____ Transportation equipment _____ Copyright _____ Licensing rights _____ Office equipment _____ Goodwill _____ Patents _____ Self-constructed buildings _____ Land _____ Production equipment _____ Trademark

Which of the following is not an amount that is needed to calculate straight-line depreciation?

Which of the following statements most appropriately describes the purpose of depreciating a long-lived tangible asset?

Freight costs incurred when a long-lived asset is purchased should generally be

Trademarks and goodwill are intangible assets that are not amortized.

Which of the following statements regarding disposal of long-lived assets is not correct?

A company purchases property that includes land,buildings and equipment for $5.5 million.The company pays $180,000 in legal fees,$220,000 in commissions,and $100,000 in appraisal fees.The land is estimated at 25%,the buildings are at 40%,and the equipment at 35% of the property value.Prepare the journal entry that is required to record the purchase assuming that the company paid 50% of the amounts using cash and signed a note for the remainder.