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Exam 9: Reporting and Interpreting Long-Lived Tangible and Intangible Assets

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Question 31

Multiple Choice

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A company purchased office equipment for $24,500 and paid $1,470 in sales tax, $550 for installation, $3,200 for a needed adjustment to the equipment, and $2,600 for supplies that will be used for periodic routine Maintenance. What is the journal entry to record this purchase?

A) Option: A
B) Option: B
C) Option: C
D) Option: D

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

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Question 32

Multiple Choice

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

A) patent.
B) copyright
C) franchise.
D) licensing right.

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

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Question 33

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A real estate management company buys an abandoned apartment complex for $4.5 million. It pays a construction company $500,000 to demolish the old building. Which of the following is true?

The journal entry to record the increase in the value of a long-lived asset would include which of the following?

If net sales revenue rises 5% while the average book value of fixed assets falls 5%:

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

When the amount of depreciation must be revised because of a change in the estimated useful life of an asset that has been depreciated for several years, it is necessary to restate prior years' financial statements.

On January 1, 2013, Horton Inc. sells a machine for $23,000. The machine was originally purchased on January 1, 2011 for $40,000. The machine was estimated to have a useful life of 5 years and no residual value. Horton uses straight-line depreciation. Make the journal entry to record this transaction.

Purrfect Pets has a facility that originally cost $375,000. The balance of the accumulated depreciation account for the facility is $258,000. The company expects to be able to sell the facility for $107,000 at the end of its useful life. The depreciable cost of the facility is:

A piece of equipment purchased on January 1, 2011, for $16,000 was estimated to have a residual value of $4,000 at the end of its three-year useful life. If the equipment was depreciated using the straight-line method and disposed of on December 31, 2012, for $5,000, what amount of gain or loss would be reported on the income statement?

Which of the following statements regarding straight-line depreciation is correct?

The company has net sales revenue of $3.6 million during 2011. The company's records also included the following information: What is the company's fixed asset turnover ratio for 2011?

Your company pays $620,000 for a patent that has 10 years remaining. Each year, your company should:

Your company buys a computer server which it expects to use for eight years and then sell when it upgrades to a more powerful model. The server would probably be used by the business that buys it at that time for another three years. The useful life of the server for your company is:

Flynn Company purchased a building for $400,000. The current book value of the building is $200,000 and the fair market value is $180,000. The sum of future cash flows from the building is $160,000. According to GAAP, the amount of impairment loss that should be recognized is

Which of McGraw-Hill's intangible assets gives it the legal right to prevent you from borrowing a textbook from a friend and photocopying all of it?

The book or carrying value of an asset is:

The Gulp convenience store chain buys new soda machines for $450,000 and pays $50,000 for installation. One-half of the total cost is paid in cash; the other half is financed. How should the company record this transaction?

Sneetch Inc. purchased a star-making machine on 1/1/2011. The cost of the machine was $17,000. Its estimated residual value was $2,000 at the end of an estimated 10-year life. a. Calculate depreciation expense for 2011 and 2012 using the straight-line method. b. Calculate depreciation expense for 2011 and 2012 using the double-declining balance method. c. Calculate the net book value of the machine as of 12/31/2012 under straight -line depreciation. d. Calculate the net book value of the machine as of 12/31/2012 under double-declining-balance depreciation.

A company bought a piece of equipment for $40,000, expecting to use it for eight years. The company then plans to sell it for $3,500. The company has already recorded depreciation of $35,995. Using the double-declining-balance method, the company's annual depreciation expense for the upcoming year would be: