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Exam 9: Fixed Assets and Intangible Assets

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Question 41

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Sands Company purchased mining rights for $500,000. They expect to harvest 1 million tons of ore over the next five years. During the current year, Sands mined 350,000 tons of ore. The entry to record the depletion would include

A) a credit to Accumulated Depletion for $350,000
B) a debit to Accumulated Depletion for $175,000
C) a debit to Depletion Expense for $175,000
D) a credit to Depletion Expense for $350,000

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

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Question 42

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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?

A) loss of $55,000
B) loss of $5,000
C) gain of $5,000
D) gain of $55,000

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

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Question 43

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A copy machine acquired on May 1 with a cost of $2,545 has an estimated useful life of 3 years. Assuming that it will have a residual value of $445, determine the depreciation for the first and second year by the straight-line method. Round your answers to the nearest whole dollar.

Classify each of the following costs associated with long-lived assets as one of the following: -Cost of insurance during the construction of new office building

On December 31, Bowman Company estimated that goodwill of $80,000 was impaired. A patent with an estimated useful economic life of 10 years was acquired for $252,000. Required: 1) Journalize the adjusting entry on December 31 for the impaired goodwill. 2) Journalize the adjusting entry on December 31 for the amortization of the patent rights.

The double-declining-balance method is an accelerated depreciation method.

Which of the following statements is true?

Expenditures for research and development are generally recorded as

The depreciation method that does not use residual value in calculating the first year's depreciation expense is

Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended.

Match the intangible assets described with their proper classification a-d) . -Rights to sell a book and make a profit

Identify the following as a fixed asset FA), or intangible asset IA), natural resource NR), or none of theseN)a) computer b) patent c) oil reserve d) goodwill e) U.S. Treasury note f) land used for employee parking g) gold mine

Classify each of the following as: -Installing a new air conditioning system in an old building

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

On June 1, 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 final partial) year of service.

Classify each of the following as: -Exterior and interior painting

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: a) straight-line b) double-declining-balance c) units-of-output used for 1,600 hours during the current year)

Classify each of the following costs associated with long-lived assets as one of the following: -Fences around land at new business location

Once the useful life of a depreciable asset has been estimated and the amount to be depreciated each year has been determined, the amounts can not be changed.

The accumulated depletion of a natural resource is reported on the