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Exam 7: Fixed Assets and Intangible Assets

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Question 41

Multiple Choice

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Land improvements include

A) fences.
B) trees and shrubs.
C) outdoor lighting.
D) All of the above.

E) B) and C)
F) None of the above

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Question 42

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Computer equipment was acquired at the beginning of the year at a cost of $56,000 with an estimated residual value of $5,000 and an estimated useful life of 5 years.Determine the second year's depreciation using straight-line depreciation.

A) $10,200
B) $22,400
C) $11,200
D) $12,200

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

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Question 43

Multiple Choice

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Goodwill is

A current asset account must be increased for revenue expenditures since they only benefit the current period.

If an asset is discarded,a loss is recognized equal to the salvage value.

The acquisition costs of property,plant,and equipment should include all normal,reasonable,and necessary costs to get the asset in place and ready for use.

Identify each of the following expenditures as chargeable to (a)Land, (b)Land Improvements, (c)Buildings, (d)Machinery and Equipment,or (e)other account.

Goodwill equals the purchase price of a company over the fair market value of its net assets.

During 2009,Lexie,Inc.acquired Lena,Inc.for $10,000,000.The fair market value of the net assets of Lena,Inc.was $8,500,000 on the date of purchase.During 2012,Lexie,Inc.determined the goodwill resulting from the Lena acquisition was impaired and had a value of $1,000,000.

A machine with a useful life of 10 years and a residual value of $4,000 was purchased for $30,000.What is annual depreciation under the straight-line method?

If a fixed asset with an original cost of $18,000 and accumulated depreciation of $2,000 is sold for $15,000,the company must

Residual value is ignored under double-declining-balance depreciation except for the final year.

A machine was purchased for $60,000.It has a useful life of 5 years and a residual value of $6,000.Under the straight-line method,what is annual depreciation expense?

The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called

Fixed assets are ordinarily presented in the balance sheet

Equipment with a useful life of 5 years and a residual value of $6,000 was purchased on January 3,2006,for $48,500.The machine was sold on January 5,2011,for $13,000.

What is the cost of the land,based on the following data?

The double-declining-balance method of depreciation is referred to as an accelerated method.

A gain is recorded on the sale of fixed assets when

The Drilling Company purchased a mining site for $500,000 on July 1,2010.The company expects to mine ore for the next 10 years and anticipates that a total of 100,000 tons will be recovered.The estimated residual value of the property is $80,000.During 2010 the company extracted 6,500 tons of ore.The depletion expense for 2010 is