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Exam 9: Long-Term Assets: Fixed and Intangible

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Question 41

True/False

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An exchange is said to have commercial substance if future cash flows remain the same as a result of the exchange.

A) True
B) False

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Question 42

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When selling a piece of equipment for cash, a loss will result when the proceeds of the sale are less than the book value of the asset.

A) True
B) False

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Question 43

Multiple Choice

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The process of transferring the cost of an asset to an expense account is called all of the following except

Classify each of the following as: -Overhauling an engine in a large truck A)Ordinary maintenance and repairs B)Asset improvements C)Extraordinary repairs

The amount of depreciation expense for the first full year of use of a fixed asset costing $95,000, with an estimated residual value of $5,000 and a useful life of 5 years, is $19,000 by the straight-line method.

The accumulated depletion of a natural resource is reported on the

Convert each of the following estimates of useful life to a straight-line depreciation rate, stated as a percentage.

Land acquired as a speculation is reported under Investments on the balance sheet.

Carter Co. acquired drilling rights for $18,550,000. The oil deposit is estimated at 74,200,000 gallons. During the current year, 6,000,000 gallons were drilled. Journalize the adjusting entry at December 31 to recognize the depletion expense.Journal

Classify each of the following as: -Adding refrigerant to an air conditioning system A)Ordinary maintenance and repairs B)Asset improvements C)Extraordinary repairs

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

The name, term, or symbol used to identify a business and its products is called

On April 15, Compton Co. paid $2,800 to upgrade a delivery truck and $125 for an oil change. What account(s) would be debited for the upgrade to delivery truck and oil change?

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

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

An asset was purchased for $58,000 and originally estimated to have a useful life of 10 years with a residual value of $3,000. After two years of straight-line depreciation, it was determined that the remaining useful life of the asset was only 2 years with a residual value of $2,000.(a) Determine the amount of the annual depreciation for the first two years.(b) Determine the book value at the end of Year 2.(c) Determine the depreciation expense for each of the remaining years after revision.

On December 31, Strike Company sold one of its batting cages for $20,000. The equipment had an initial cost of $310,000 and had accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. What is the amount of the gain or loss on this transaction?

A copy machine acquired with a cost of $1,410 has an estimated useful life of 4 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 (a)straight-line method (b)double-declining-balance method (c)units-of-output method (4,500 copies were made the first year)

When a company exchanges machinery and receives a trade-in allowance less than the book value, this transaction would be recorded with which of the following entries?

Solare Company acquired mineral rights for $60,000,000. The diamond deposit is estimated at 6,000,000 tons. During the current year, 2,300,000 tons were mined and sold.(a)Determine the depletion rate.(b)Determine the amount of depletion expense for the current year.(c)Journalize the adjusting entry to recognize the depletion expense.