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Exam 9: Long-Term Assets: Fixed and Intangible

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Question 51

Multiple Choice

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A capital expenditure results in a debit to

A) an expense account
B) a capital account
C) a liability account
D) an asset account

E) None of the above
F) B) and D)

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Question 52

Multiple Choice

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Mathai Company has sales of $4,800,000 for the current year. The book value of its fixed assets at the beginning of the year was $1,450,000 and at the end of the year was $1,600,000. The fixed asset turnover ratio for Mathai is

A) 3.0
B) 3.1
C) 3.2
D) 3.3

E) A) and C)
F) None of the above

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Question 53

Short Answer

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

Classify each of the following as: -Paving a new parking lot A)Ordinary maintenance and repairs B)Asset improvements C)Extraordinary repairs

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

Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of 5 years, or 14,000 operating hours, and a residual value of $10,000. Assume 1,200 hours were used the first year and 2,250, the second year. What is the first-year depreciation for straight-line (SL) , double-declining balance (DDB) and units-of-output (UOO) methods?

The proper journal entry to purchase a computer costing $975 on account to be utilized within the business would be

A lathe priced at a fair market value of $124,000 is acquired in a transaction that has commercial substance by trading in a similar lathe and paying cash for the difference between the trade-in allowance of $45,000 and the price of the new lathe.​ (a) What is the amount of cash given? (b) Assuming that the book value of the lathe traded in is $50,000, what is the gain or loss on the exchange?

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

The book value of a fixed asset reported on the balance sheet represents its market value on that date.

The following information was taken from a recent annual report of Harrison Company (in millions): Required: (a)Compute the book value of the fixed assets for the current year and the preceding year and explain the differences, if any.(b)Would you normally expect the book value of fixed assets to increase or decrease during the year?

Falcon Company acquired an adjacent lot to construct a new warehouse, paying $40,000 and giving a short-term note for $410,000. Legal fees paid were $13,275, delinquent taxes assessed were $14,500, and fees paid to remove an old building from the land were $15,800. Materials salvaged from the demolition of the building were sold for $6,800. A contractor was paid $890,000 to construct the new warehouse. What is the cost of the land to be reported on the balance sheet?

Expenditures that add to the utility of fixed assets for more than one accounting period are

Newport Company has sales of $2,025,000 for the current year. The book value of its fixed assets at the beginning of the year was $550,000 and at the end of the year was $800,000. The fixed asset turnover ratio for Newport is

Classify each of the following as: -Installing a new air conditioning system in an old building A)Ordinary maintenance and repairs B)Asset improvements C)Extraordinary repairs

The entry to record the disposal of fixed assets will include a credit to accumulated depreciation.

Journalize each of the following transactions: (a)A wing costing $2,345,000 was added to the building. A new mortgage was issued for the cost.(b)Equipment was upgraded to increase its capacity to produce widgets. The upgrade cost of $11,500 was paid in cash.(c)A major overhaul costing $8,000 on a machine increased the useful life by 4 years. The payment was made in cash.

The Weber Company purchased a mining site for $1,600,000 on July 1. The company expects to mine ore for the next 10 years and anticipates that a total of 400,000 tons will be recovered. During the first year, the company extracted 6,500 tons of ore. The depletion expense is

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

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