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Exam 9: Fixed Assets and Intangible Assets

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Question 51

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Which of the following below is an example of a capital expenditure?

A) replacing an engine in a company car
B) cleaning the carpet in the front room
C) replacing all burned-out light bulbs in the factory
D) tune-up for a company truck

E) All of the above
F) B) and C)

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Question 52

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The accumulated depletion account is

A) an intangible asset account
B) reported on the balance sheet as a deduction from the cost of the mineral deposit
C) reported on the income statement as other expense
D) an expense account

E) B) and C)
F) C) and D)

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Question 53

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The entry to record the disposal of fixed assets will include a credit to accumulated depreciation.

Match the intangible assets described with their proper classification a-d) . -Reputation of a company

Copy equipment was acquired at the beginning of the year at a cost of $72,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years. It is estimated that the machine will output an estimated 1,000,000 copies. This year, 315,000 copies were made. Determine the a) depreciable cost, b) depreciation rate, and c) the units-of-output depreciation for the year.

For each of the following fixed assets, determine the depreciation expense for Year 3: Disposal date is N/A if asset is still in use. Method: SL = straight line; DDB = double declining balance Assume the estimated life is 5 years for each asset.

A copy machine acquired with a cost of $1,410 has an estimated useful life of 4 years. It is also expected to have a useful operating life of 13,350 copies. Assuming that it will have a residual value of $75, determine the depreciation for the first year by the a. straight-line method b. double-declining-balance method c. units-of-output method 4,500 copies were made the first year)

Determine the depreciation, for the year of acquisition and for the following year, of a fixed asset acquired on October 1 for $500,000, with an estimated life of 5 years, and residual value of $50,000, using a) the double declining-balance method and b) the straight-line method. Assume a fiscal year ending December 31.

The name, term, or symbol used to identify a business and its products is called

Equipment acquired at a cost of $126,000 has a book value of $42,000. Journalize the disposal of the equipment under the following independent assumptions. a. The equipment had no market value and was discarded. b. The equipment is sold for $54,000. c. The equipment is sold for $24,000. d. The equipment is traded-in for a similar asset. The list price of the new equipment is $63,000. The buyer gave no cash in the exchange. The transaction lacks commercial substance. Journal

Equipment costing $80,000 with a useful life of 10 years and a residual value of $8,000 has been depreciated for 6 years by the straight-line method. Assume a fiscal year ending December 31. a) What is the book value at the end of the sixth year of use? b) If early in the seventh year it is estimated that the remaining useful life is 5 years instead of 4) and the residual value is $6,000, what is the amount of depreciation for the seventh year?

On July 1, Hartford Construction purchases a bulldozer for $228,000. The equipment has a 9-year life with a residual value of $16,000. Hartford uses the units-of-output method depreciation, and the bulldozer is expected to yield 26,500 operating hours. a) Calculate the depreciation expense per hour of operation. b) The bulldozer is operated 1,250 hours in the first year, 2,755 hours in the second year, and 1,225 hours in the third year of operations. Journalize the depreciation expense for each year.

Classify each of the following costs associated with long-lived assets as one of the following: -Costs to survey a new piece of land for a new business location

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

Match the intangible assets described with their proper classification a-d) . -Mickey Mouse

Which intangible assets are amortized over their useful life?

Long-lived assets held for sale are classified as fixed assets.

Minerals removed from the earth are classified as intangible assets.

A building with an appraisal value of $154,000 is made available at an offer price of $172,000. The purchaser acquires the property for $40,000 in cash, a 90-day note payable for $45,000, and a mortgage amounting to $75,000. The cost basis recorded in the buyer's accounting records to recognize this purchase is

Equipment acquired on January 2, Year 1, at a cost of $525,000 has an estimated useful life of eight years and an estimated residual value of $45,000. Required: 1) What is the annual amount of depreciation for the first three years, assuming the straight-line method of depreciation is used? 2) What is the book value of the equipment on January 1, Year 4? 3) Assuming that the equipment is sold on January 2, Year 4, for $326,000, journalize the entry to record the sale. 4) Assuming that the equipment is sold on January 2, Year 4, for $394,000 instead of $168,500, journalize the entry to record the sale.