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Exam 9: Fixed Assets and Intangible Assets

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Question 71

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

A) True
B) False

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Question 72

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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 D)
F) C) and D)

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Question 73

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Regardless of the depreciation method,the amount that will be depreciated during the life of the asset will be the same.

On December 31,Strike Company sold one of its batting cages for $55,000.The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000.Depreciation has been taken up to the end of the year.What is the amount of the gain or loss on this transaction?

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

Though a piece of equipment is still being used,the equipment should be removed from the accounts if it has been fully depreciated.

Golden Sales has bought $135,000 in fixed assets on January 1st associated with sales equipment.The residual value of these assets is estimated at $10,000 at the end of their 4-year service life.Golden Sales managers want to evaluate the options of depreciation. a Compute the annual straight-line depreciation and provide the sample depreciation journal entry to be posted at the end of each of the years. b Write the journal entries for each year of the service life for these assets using the double-declining balance method.

A number of major structural repairs completed at the beginning of the current fiscal year at a cost of $1,000,000 are expected to extend the life of a building 10 years beyond the original estimate.The original cost of the building was $6,552,000,and it has been depreciated by the straight-line method for 25 years.Estimated residual value is negligible and has been ignored.The related accumulated depreciation account after the depreciation adjustment at the end of the preceding fiscal year is $4,550,000. a What has the amount of annual depreciation been in past years? b What was the original life estimate of the building? c To what account should the $1,000,000 be debited? d What is the book value of the building after the extraordinary repairs have been made? e What is the expected remaining life of the building after the extraordinary repairs have been made? f What is the amount of straight-line depreciation for the current year,assuming that the repairs were completed at the very beginning of the current year? Round to the nearest dollar.

Computer equipment was acquired at the beginning of the year at a cost of $57,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years.Determine the second-year depreciation using the straight- line method.

A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours.It is to be depreciated by the units-of-output method.What is the amount of depreciation for the second full year,during which the machine was used 5,000 hours?

Revising depreciation estimates affects the amounts of depreciation expense recorded in past periods.

Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two categories

Losses on the discarding of fixed assets are reported in the income statement.

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

The amount of depreciation expense for the first full year of use of a fixed asset costing $95,000,with an estimated residual value of $5,000 and a useful life of 5 years,is $19,000 by the straight-line method.

When a company discards machinery that is fully depreciated,this transaction would be recorded with the following entry

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

A fixed asset with a cost of $41,000 and accumulated depreciation of $36,500 is traded for a similar asset priced at $60,000.Assuming a trade-in allowance of $3,000,the recognized loss on the trade is

The most widely used depreciation method is

A capitalized asset will appear on the balance sheet as a long-term asset.