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Exam 9: Long-Term Assets: Fixed and Intangible

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Question 121

True/False

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The cost of a patent with a remaining legal life of 10 years and an estimated useful life of 7 years is amortized over 10 years.

A) True
B) False

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Question 122

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The Bacon Company acquired new machinery with a price of $15,200 by trading in similar old machinery and paying $12,700. The old machinery originally cost $9,000 and had accumulated depreciation of $5,000. In recording this transaction, Bacon Company should record

A) the new machinery at $16,700
B) the new machinery at $12,700
C) a gain of $1,500
D) a loss of $1,500

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

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Question 123

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Copy equipment was acquired at the beginning of the year at a cost of $72,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years. It is estimated that the machine will output an estimated 1,000,000 copies. This year, 315,000 copies were made. Determine the (a) depreciable cost, (b) depreciation rate, and (c) the units-of-output depreciation for the year.

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

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

The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is

On December 31, it was estimated that goodwill of $65,000 was impaired. On July 1, a patent with an estimated useful economic life of 10 years was acquired for $60,000.(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.

A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-output method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

A fixed asset with a cost of $41,000 and accumulated depreciation of $36,000 is traded for a similar asset priced at $50,000 (fair market value) in a transaction with commercial substance. Assuming a trade-in allowance of $4,000,at what cost will the new equipment be recorded in the books?

A leased asset will appear on the balance sheet as a long-term asset.

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: (a)Determine the amount of depletion expense for the current year.(b)Journalize the adjusting entry to recognize the depletion expense.

Long-lived assets held for sale are classified as fixed assets.

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

Computer equipment was acquired at the beginning of the year at a cost of $65,000 that has an estimated residual value of $3,800 and an estimated useful life of 8 years. Determine the (a) depreciable cost, (b) straight-line rate, and (c) annual straight-line depreciation.

Classify each of the following as: -Fixing damage due to a car accident A)Ordinary maintenance and repairs B)Asset improvements C)Extraordinary repairs

All of the following are needed for the calculation of straight-line depreciation except

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

A machine costing $185,000 with a 5-year life and $20,000 residual value was purchased January 2. Compute depreciation for each of the five years, using the double-declining-balance method.

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.

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)