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Exam 9: Long-Term Assets: Fixed and Intangible

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Question 31

True/False

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Residual value is not incorporated in the initial calculations for double-declining-balance depreciation.

A) True
B) False

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Question 32

Multiple Choice

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In a lease contract, the party who legally owns the asset is the

A) lessee
B) lessor
C) operator
D) banker

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

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Question 33

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Determine the depreciation, for the year of acquisition and for the following year of a fixed asset acquired on October 1 for $500,000, with an estimated life of 5 years, and residual value of $50,000, using (a) the double declining-balance method and (b) the straight-line method. Assume a fiscal year ending December 31.

As a company records depreciation expense for a period of time, cash is accumulated to replace fixed assets as they wear out.

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

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

Which of the following is true?

The normal balance of the accumulated depreciation account is a debit.

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

The journal entry for recording payment for the short-term lease of a fixed asset would

On December 31, Strike Company has decided to discard one of its batting cages. The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. Which of the following will be included in the entry to record the disposal?

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

Classify each of the following costs associated with long-lived assets as one of the following: -Sales taxes paid on new factory equipment

A gain can be realized when a fixed asset is discarded.

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

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.

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?

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

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 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