FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 10: Fixed Assets and Intangible Assets

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

True/False

Review LaterAdd Note

Review Later

When a company establishes an outstanding reputation and has a competitive advantage because of it, the company should record goodwill on its financial statements.

A) True
B) False

Correct Answer

verified

Show Answer

Question 52

True/False

Review LaterAdd Note

Review Later

When a seller allows a buyer an amount for old equipment that is traded in for new equipment of similar use, this amount is known as boot.

A) True
B) False

Correct Answer

verified

Show Answer

Question 53

True/False

Review LaterAdd Note

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

On June 1, 2014, Aaron Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years and 30,000 hours. Using straight line depreciation, calculate depreciation expense for the second year.

When minor errors occur in the estimates used in the determination of depreciation, the amounts recorded for depreciation expense in the past should be corrected.

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

Machinery is purchased on July 1 of the current fiscal year for $240,000. It is expected to have a useful life of 4 years, or 25,000 operating hours, and a residual value of $15,000. Compute the depreciation for the last six months of the current fiscal year ending December 31 by each of the following methods: (Round the answer to the nearest dollar.)

Standby equipment held for use in the event of a breakdown of regular equipment is reported as property, plant, and equipment on the balance sheet.

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

An operating lease is accounted for as if the lessee has purchased the asset.

Which of the following should be included in the acquisition cost of a piece of equipment?

As a company records depreciation expense for a period of time a corresponding cash inflow from investing activities is reported on the statement of cash flows.

A 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 if using the double-declining balance method.

Clanton Company engaged in the following transactions during 2011. Record each in the general journal below: 1) On January 3, 2011, Clanton purchased a copyright from Dalton Company with a cost of $250,000 with a remaining useful life of 25 years. 2) On January 10, 2011, Clanton purchased a trademark from Felton Company with a cost of $700,000. 3) On July 1, 2011, Clanton purchased a patent from Garrison Company at a cost of $80,000. The remaining legal life of the patent is 15 years and the expected useful life is 11 years. 4) On July 2, 2011, Clanton paid $30,000 in legal fees to defend the patent protection purchased on July 1, 2011. 5) Recorded the appropriate amortization for the intangible assets for 2011. 6) Clanton Company includes an asset in its ledger recorded when Clanton purchased a computer service business at a price in excess of the fair value of the assets of the company in the amount of $400,000. At December 31, 2011, $100,000 of this asset has become impaired.

A gain can be realized when a fixed asset is discarded.

Computer equipment (office equipment) purchased 6 1/2 years ago for $170,000, with an estimated life of 8 years and a residual value of $10,000, is now sold for $60,000 cash. (Appropriate entries for depreciation had been made for the first six years of use.) Journalize the following entries:

A fixed asset's estimated value at the time it is to be retired from service is called

Equipment costing $80,000 with a useful life of 10 years and a residual value of $8,000 has been depreciated for 6 years by the straight-line method. Assume a fiscal year ending December 31.

A fixed asset with a cost of $52,000 and accumulated depreciation of $47,500 is traded for a similar asset priced at $60,000 in a transaction with commercial substance. Assuming a trade-in allowance of $5,000, the cost basis of the new asset is

A copy machine acquired with a cost of $1,410 has an estimated useful life of 4 years. It is also expected to have a useful operating life of 13,350 copies. Assuming that it will have a residual value of $75, determine the depreciation for the first year by the