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Exam 10: Long-Term Assets: Fixed and Intangible

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Question 111

Multiple Choice

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Classify each of the following costs associated with long-lived assets as one of the following: -Interest on money borrowed to finance construction of new office building

A) Buildings
B) Machinery and equipment
C) Land
D) Land improvements

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

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Question 112

Multiple Choice

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When a company sells machinery at a price equal to its book value, this transaction would be recorded as a

A) debit to Cash and Accumulated Depreciation and a credit to Machinery
B) debit to Machinery and a credit to Cash and Accumulated Depreciation
C) debit to Cash and Machinery and a credit to Accumulated Depreciation
D) debit to Cash and Depreciation Expense and a credit to Accumulated Depreciation

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

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Question 113

True/False

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

Which of the following is true?

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

A characteristic of a fixed asset is that it is

Equipment was acquired at the beginning of the year at a cost of $75,000. The equipment was depreciated using the straight-line method based on an estimated useful life of six years and an estimated residual value of $7,500. (a)What was the depreciation expense for the first year? (b)Assuming the equipment was sold at the end of the second year for $59,000, determine the gain or loss on sale of the equipment. (c)Journalize the entry to record the sale.

Classify each of the following as: -Fixing damage due to a car accident

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

The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is the

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

The double-declining-balance rate for calculating depreciation expense is determined by doubling the straight-line rate. Assuming that an asset has a useful life of 25 years, determine the rate to be used under the double-declining-balance method.

Classify each of the following costs associated with long-lived assets as one of the following: -Purchase price of land purchased for new business site

On December 31, Strike Company sold one of its batting cages for $20,000. 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. What is the amount of the gain or loss on this transaction?

XYZ Co. incurred the following costs related to the office building used in operating its sports supply company: (a)Replaced a broken window. (b)Replaced the roof that had been on the building 23 years. (c)Serviced all the air conditioners before summer started. (d)Replaced the air conditioners in the customer service areas. (e)Added a warehouse to the back of the building. (f)Repainted the interior walls. (g)Installed window shutters on all windows.​Classify each of the costs as a capital expenditure or a revenue expenditure.

Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended.

A copy machine acquired on May 1 with a cost of $2,545 has an estimated useful life of three years. Assuming that it will have a residual value of $445, determine the depreciation for the first and second year by the straight-line method. Round your answers to the nearest whole dollar.

A tangible asset is one that lacks physical existence.

Classify each of the following costs associated with long-lived assets as one of the following: -Fences around land at new business location

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