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Exam 10: Long-Term Assets: Fixed and Intangible

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Question 81

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An asset leased under an operating lease will appear on the balance sheet as a long-term asset.

A) True
B) False

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Question 82

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An estimate of the amount for which an asset can be sold at the end of its useful life is called residual value.

A) True
B) False

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Question 83

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The double-declining-balance depreciation method calculates depreciation each year by taking twice the straight-line rate times the book value of the asset at the beginning of each year.

Capital expenditures are costs that are charged to stockholders' equity accounts.

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

What is the cost of the land, based on the following data? $\begin{array}{lr}\text { Land purchase price } & \$ 178,000 \\\text { Broker's commission } & 15,000 \\\text { Payment for demolition } & \\\text { and removal of existing building } & 5,000 \\\text { Cash received from sale of materials } & \\\text { salvaged from demolished building } & 2,000\end{array}$

Classify each of the following costs associated with long-lived assets as one of the following: -Repairs made to used office equipment

Match the intangible assets described with their proper classification (a-d) . ​ -Mickey Mouse

Equipment was purchased on January 5, Year 1, at a cost of $90,000. The equipment had an estimated useful life of eight years and an estimated residual value of $8,000.​After using the equipment for three years, the useful life was revised to a total of 10 years and the residual value was reduced to $2,004.​Determine the straight-line depreciation expense for Year 4 and the following years.

The entry to record the disposal of fixed assets will include a credit to Accumulated Depreciation.

Patents are exclusive rights to produce and sell goods with one or more unique features.

Minerals removed from the earth are classified as intangible assets.

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

Identify each of the following expenditures as chargeable to (a) Land, (b) Land Improvements, (c) Buildings, (d) Machinery and Equipment, or (e) other account. (1)Cost of paving parking area for employees and customers (2)Insurance during construction of building (3)Interest incurred on loan during construction of building (4)Fee paid for installation of equipment (5)Special foundation for new equipment acquired (6)Insurance on new equipment while in transit (7)Freight charges on new equipment (8)Cost of repairing vandalism damage to equipment during installation (9)Sales tax on new equipment (10)Cost incurred in repairing damage resulting from installation of new equipment (11)Cost of land fill for building site (12)Cost of lubricating oil purchased for periodic oil changes for equipment (13)Parking lot lighting (14)Installing a fence around the parking lot (15)Repainting the trim on a building (16)Special assessment paid to city for extension of water main to property (17)Cost of razing and removing the old building on property acquired for a building site (18)Delinquent real estate taxes assumed by purchaser on property acquired for a building site (19)Attorney's fee for title search (20)Architect's fee for building plans and supervision of construction

A copy machine acquired with a cost of $1,410 has an estimated useful life of four 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 following methods: (a)Straight-line (b)Double-declining-balance (c)Units-of-activity method (4,500 copies were made the first year)?

Classify each of the following as: -Adding refrigerant to an air conditioning system

The cost of a patent with a remaining legal life of 10 years and an estimated useful life of seven years is amortized over 10 years.

Machinery was purchased on January 1 for $51,000. The machinery has an estimated life of seven 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) :

On July 1, Hartford Construction purchases a bulldozer for $228,000. The equipment has a nine-year life with a residual value of $16,000. Hartford uses the units-of-activity method of depreciation, and the bulldozer is expected to yield 26,500 operating hours. (a) Calculate the depreciation expense per hour of operation. (b) The bulldozer is operated 1,250 hours in the first year, 2,755 hours in the second year, and 1,225 hours in thethird year of operations. Journalize the depreciation expense for each year.?

Match each account name to the financial statement section (a-i) in which it would appear. -Loss on Disposal of Asset