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Exam 9: Fixed Assets and Intangible Assets

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Question 91

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

A) debit the fixed asset and credit Cash
B) debit Rent Expense and credit Cash
C) debit a liability and credit Cash
D) be a memo entry only

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

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Question 92

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Solare Company acquired mineral rights for $60,000,000. The diamond deposit is estimated at 6,000,000 tons. During the current year, 2,300,000 tons were mined and sold. a. Determine the depletion rate. b. Determine the amount of depletion expense for the current year. c. Journalize the adjusting entry to recognize the depletion expense.

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a) $10 per ton
b) $23,000,000
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Question 93

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Which of the following is true?

Land acquired as a speculation is reported under Investments on the balance sheet.

If a fixed asset with a book value of $10,000 is traded for a similar fixed asset, a trade-in allowance of $15,000 is granted by the seller, and the transaction is deemed to have commercial substance, the buyer would report a gain on exchange of fixed assets of $5,000.

When a property, plant, and equipment asset is sold for cash, any gain or loss on the asset sold should be recorded.

Classify each of the following as: -Paving a new parking lot

The proper journal entry to purchase a computer costing $975 on account to be utilized within the business would be

Computer equipment office equipment) purchased 6 1/2 years ago for $170,000, with an estimated life of 8 years and a residual value of $10,000, is now sold for $60,000 cash. Appropriate entries for depreciation had been made for the first six years of use.) Journalize the following entries: a) Record the depreciation for the one-half year prior to the sale, using the straight-line method. b) Record the sale of the equipment. c) Assuming that the equipment had been sold for $25,000 cash, prepare the entry to record the sale.

Classify each of the following costs associated with long-lived assets as one of the following: -Cost assessed by city for paving a public street that borders land on which a new business location will be constructed

On July 1, Sterns Co. acquired patent rights for $36,000. The patent has a useful life of 6 years and a legal life of 15 years. Journalize the adjusting entry on December 31 to recognize the amortization. Journal $\begin{array} { | c | l | c | c | c | } \hline \text { Date } & \text { Description } & \begin{array} { c } \text { Post. } \\\text { Ref. }\end{array} & \text { Debit } & \text { Credit } \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline\end{array}$

For income tax purposes, most companies use an accelerated deprecation method called double declining balance.

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

On December 31, it was estimated that goodwill of $65,000 was impaired. On July 1, a patent with an estimated useful economic life of 10 years was acquired for $60,000. 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.

Residual value is also known as all of the following except

The formula for depreciable cost is

An estimate of the amount for which an asset can be sold at the end of its useful life is called residual value.

Match each account name to the financial statement section a-i) in which it would appear. -Repairs Expense

A gain can be realized when a fixed asset is discarded.

Which of the following are criteria for determining whether to record an asset as a fixed asset?