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Exam 9: Fixed Assets and Intangible Assets

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Question 71

True/False

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When a plant asset is traded for another similar asset, losses on the asset traded are not recognized.

A) True
B) False

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Question 72

Multiple Choice

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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, would have a cost basis of

A) $121,000
B) $132,000
C) $114,000
D) $126,000

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

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Question 73

True/False

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When a seller allows a buyer an amount for old equipment that is traded in for new equipment of similar use, this amount is known as boot.

It is necessary for a company to use the same depreciation method for all of its depreciable assets.

The acquisition costs of property, plant, and equipment should include all normal, reasonable and necessary costs to get the asset in place and ready for use.

Capital expenditures are costs of acquiring, constructing, adding, or replacing property, plant and equipment.

The natural resources of some companies include

When depreciation estimates are revised, all years of the asset's life are affected.

Costs associated with normal research and development activities should be treated as intangible assets.

When a company exchanges machinery and receives a trade-in allowance greater than the book value, this transaction would be recorded with which of the following entries assuming the exchange was considered to have commercial substance) ?

When a company replaces a component of property, plant, and equipment, which statement below does not account for one of the steps in the process?

In a lease contract, the party who legally owns the asset is the

Match the intangible assets described with their proper classification a-d) . -Nike swoosh

Both the initial cost of the asset and the accumulated depreciation will be taken off the books with the disposal of the asset.

On December 31, Strike Company has decided to discard one of its batting cages. The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. Which of the following will be included in the entry to record the disposal?

Classify each of the following costs associated with long-lived assets as one of the following: -Outdoor lighting at new business location

Match each account name to the financial statement section a-i) in which it would appear. -Gain on Sale of Equipment

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.

The cost of computer equipment does not include the consultant's fee to supervise installation of the equipment.

Classify each of the following costs associated with long-lived assets as one of the following: -Paved parking areas at new business location