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Exam 9: Long-Term Assets: Fixed and Intangible

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Question 101

Multiple Choice

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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

A) $114,000
B) $126,000
C) $121,000
D) $132,000

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

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Question 102

Multiple Choice

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

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Question 103

True/False

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

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

When land is purchased to construct a new building, the cost of removing any structures on the land should be charged to the building account.

Equipment was purchased on January 5, year 1, at a cost of $90,000. The equipment had an estimated useful life of 8 years and an estimated residual value of $8,000.​ After using the equipment for 3 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 the Year 4 and following years.

The ratio measuring the number of dollars of sales earned per dollar of fixed assets is the

For income tax purposes, most companies use an accelerated deprecation method called double declining balance.

Classify each of the following costs associated with long-lived assets as one of the following: -Sales taxes paid on new factory equipment A)Buildings B)Machinery and equipment C)Land D)Land improvements

Which of the following are criteria for determining whether to record an asset as a fixed asset?

Match the intangible assets described with their proper classification (a-d).​ -iTunes music A)Patent B)Copyright C)Trademark D)Goodwill

Equipment with a cost of $220,000 has an estimated residual value of $30,000 and an estimated life of 10 years or 19,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 2,100 hours?

Classify each of the following costs associated with long-lived assets as one of the following: -Costs of government permits required to develop land for a new business location A)Buildings B)Machinery and equipment C)Land D)Land improvements

On April 15, Compton Co. paid $2,800 to upgrade a delivery truck and $125 for an oil change. Journalize the entries for the upgrade to delivery truck and oil change expenditures.

On July 1, Sterns Co. acquired patent rights for $36,000. The patent has a useful life of 6 years and a legal life of 15 years. Journalize the adjusting entry on December 31 to recognize the amortization.Journal

Which of the following is included in the cost of constructing a building?

Equipment with a cost of $160,000, an estimated residual value of $40,000, and an estimated life of 15 years was depreciated by the straight-line method for 4 years. Due to obsolescence, it was determined that the remaining useful life should be shortened by 3 years and the residual value changed to zero. The depreciation expense for the current and future years is

The calculation for annual depreciation using the units-of-output method is

Classify each of the following costs associated with long-lived assets as one of the following: -Landscaping at new business location A)Buildings B)Machinery and equipment C)Land D)Land improvements

Classify each of the following costs associated with long-lived assets as one of the following: -Repairs made to used office equipment A)Buildings B)Machinery and equipment C)Land D)Land improvements