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Exam 9: Fixed Assets and Intangible Assets

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Question 91

Multiple Choice

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Land acquired so it can be resold in the future is listed on the balance sheet as an

A) fixed asset
B) intangible asset
C) investment
D) current asset

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

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Question 92

True/False

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The cost of a patent with a remaining legal life of 10 years and an estimated useful life of 7 years is amortized over 10 years.

A) True
B) False

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Question 93

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Long-lived assets held for sale are classified as fixed assets.

A copy machine acquired on July 1 with a cost of $1,450 has an estimated useful life of 4 years.Assuming that it will have a residual value of $250,determine the depreciation for the first year by the double-declining-balance method.

Computer equipment was acquired at the beginning of the year at a cost of $63,000 that has an estimated residual value of $3,000 and an estimated useful life of 5 years.Determine the a depreciable cost b double-declining-balance rate,and c double-declining-balance depreciation for the first year.

On April 15,Compton Co.paid $2,800 to upgrade a delivery truck and $125 for an oil change.Journalize the entries for the upgrade to delivery truck and oil change expenditures.

Xtra Company purchased a business from Argus for $96,000 above the fair value of its net assets.Argus had developed the goodwill over 12 years.How much would Xtra amortize the goodwill for its first year?

Which of the following is included in the cost of constructing a building?

A used machine with a purchase price of $77,000,requiring an overhaul costing $8,000,installation costs of $5,000,and special acquisition fees of $3,000,would have a cost basis of

Equipment was purchased on January 5,year 1,at a cost of $90,000.The equipment had an estimated useful life of 8 years and an estimated residual value of $8,000. After using the equipment for 3 years,the useful life was revised to a total of 10 years and the residual value was reduced to $2,004. Determine the straight-line depreciation expense for the Year 4 and following years.

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?

The transfer to expense of the cost of intangible assets attributed to the passage of time or decline in usefulness is called amortization.

It is not necessary for a company to use the same depreciation method for financial statements and for determining income taxes.

The difference between the balance in a fixed asset account and its related accumulated depreciation account is the asset's book value.

The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is

Long-lived assets that are intangible in nature,used in the operations of the business and not held for sale in the ordinary course of business are called fixed assets.

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