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Exam 9: Fixed Assets and Intangible Assets

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Question 71

Multiple Choice

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When a company exchanges machinery and receives a trade-in allowance greater than the book value, this transaction would be recorded with which of the following entries assuming the exchange was considered to have commercial substance) ?

A) debit Machinery and Accumulated Depreciation; credit Machinery, Cash, and Gain on Exchange of Machinery
B) debit Cash and Machinery; credit Accumulated Depreciation and Machinery
C) debit Machinery and Accumulated Depreciation; credit Machinery and Cash
D) debit Cash and Machinery; credit Accumulated Depreciation

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

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Question 72

Multiple Choice

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Match each account name to the financial statement section a-i) in which it would appear. -Gain on Sale of Equipment

A) Current Assets
B) Fixed Assets
C) Intangible Assets
D) Current Liability
E) Long-Term Liability
F) Owners' Equity
G) Revenues
H) Operating Expenses
I) Other Income/Expense

J) A) and D)
K) F) and H)

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Question 73

True/False

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When a plant asset is traded for another similar asset, losses on the asset traded are not recognized.

Capital expenditures are costs of acquiring, constructing, adding, or replacing property, plant and equipment.

Champion Company purchased and installed carpet in its new general offices on March 31 for a total cost of $18,000. The carpet is estimated to have a 15-year useful life and no residual value. a. Prepare the journal entries necessary for recording the purchase of the new carpet. b. Record the December 31 adjusting entry for the partial-year depreciation expense for the carpet assuming that Champion Company uses the straight-line method.

A new machine with a purchase price of $109,000, with transportation costs of $12,000, installation costs of $5,000, and special acquisition fees of $6,000, would have a cost basis of

It is necessary for a company to use the same depreciation method for all of its depreciable assets.

Match the intangible assets described with their proper classification a-d) . -Nike swoosh

The natural resources of some companies include

When depreciation estimates are revised, all years of the asset's life are affected.

When a company replaces a component of property, plant, and equipment, which statement below does not account for one of the steps in the process?

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.

Classify each of the following costs associated with long-lived assets as one of the following: -Outdoor lighting at new business location

Classify each of the following costs associated with long-lived assets as one of the following: -Paved parking areas at new business location

In a lease contract, the party who legally owns the asset is the

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 cost of computer equipment does not include the consultant's fee to supervise installation of the equipment.

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.

Both the initial cost of the asset and the accumulated depreciation will be taken off the books with the disposal of the asset.

Costs associated with normal research and development activities should be treated as intangible assets.