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Exam 9: Fixed Assets and Intangible Assets

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Question 31

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If a fixed asset, such as a computer, were purchased on January 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is

A) Accumulated Depreciation Depreciation Expense
1,200
1,200
B) Depreciation Expense Accumulated Depreciation
1,200
1,200
C) Accumulated Depreciation Depreciation Expense
100
100
D) Depreciation Expense Accumulated Depreciation
100
100

E) B) and D)
F) B) and C)

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Question 32

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On the first day of the fiscal year, a new walk-in cooler with a list price of $58,000 was acquired in exchange for an old cooler and $44,000 cash. The old cooler had a cost of $25,000 and accumulated depreciation of $16,000. Assume the transaction has commercial substance. a) Determine the gain to be recorded on the exchange. b) Journalize the entry to record the exchange.

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a) b)Equipment new) 58,000
Ac...

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Question 33

Multiple Choice

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An asset was purchased for $120,000 on January 1, Year 1 and originally estimated to have a useful life of 10 years with a residual value of $10,000. At the beginning of the third year, it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,000. Calculate the third-year depreciation expense using the revised amounts and straight-line method.

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

An asset was purchased for $58,000 and originally estimated to have a useful life of 10 years with a residual value of $3,000. After two years of straight-line depreciation, it was determined that the remaining useful life of the asset was only 2 years with a residual value of $2,000. a) Determine the amount of the annual depreciation for the first two years. b) Determine the book value at the end of Year 2. c) Determine the depreciation expense for each of the remaining years after revision.

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

Classify each of the following as: -Resurfacing a pool in an apartment building

Match each account name to the financial statement section a-i) in which it would appear. -Loss from Impaired Goodwill

Chasteen Company acquired mineral rights for $9,100,000. The mineral deposit is estimated at 65,000,000 tons. During the current year, 18,375,000 tons were mined and sold. Required: 1) Determine the amount of depletion expense for the current year. 2) Journalize the adjusting entry to recognize the depletion expense.

When a company exchanges machinery and receives a trade-in allowance less than the book value, this transaction would be recorded with which of the following entry?

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.

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.

Match each account name to the financial statement section a-i) in which it would appear. -Buildings

Classify each of the following costs associated with long-lived assets as one of the following: -Modifying a building purchased for new business location

Machinery was purchased on January 1 for $51,000. The machinery has an estimated life of 7 years and an estimated salvage value of $9,000. Double-declining-balance depreciation for the second year would be round calculations to the nearest dollar) :

A machine costing $57,000 with a 6-year life and $54,000 depreciable cost was purchased January 1. Compute the yearly depreciation expense using straight-line depreciation.

Match each account name to the financial statement section a-i) in which it would appear. -Trademarks

Classify each of the following costs associated with long-lived assets as one of the following: -Sales taxes paid on new factory equipment

On July 1, Harding Construction purchases a bulldozer for $228,000. The equipment has a 8-year life with a residual value of $16,000. Harding uses straight-line depreciation. a) Calculate the depreciation expense and provide the journal entry for the first year ending December 31. b) Calculate the third year's depreciation expense and provide the journal entry for the third year ending December 31. c) Calculate the last year's depreciation expense and provide the journal entry for the last year.

Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of 5 years, or 14,000 operating hours, and a residual value of $10,000. Compute the depreciation for the first and second years of use by each of the following methods: a) straight-line b) units-of-output 1,200 hours first year; 2,250 hours second year)c) double-declining-balance