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Exam 9: Long-Term Assets: Fixed and Intangible

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Question 1

True/False

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Losses on the discarding of fixed assets are reported in the income statement.

A) True
B) False

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Question 2

Multiple Choice

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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?

A) debit Machinery and Accumulated Depreciation; credit Machinery and Cash
B) debit Cash and Machinery; credit Accumulated Depreciation
C) debit Cash and Machinery; credit Accumulated Depreciation and Machinery
D) debit Machinery,Accumulated Depreciation,and Loss on Exchange of Machinery; credit Machinery and Cash

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

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Question 3

Multiple Choice

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The accumulated depletion account is

Machinery acquired at a cost of $80,000 and on which there is accumulated depreciation of $55,000 (including depreciation for the current year to date)is exchanged for similar machinery.Assume that the transaction has commercial substance.For financial reporting purposes,present entries to record the exchange of the machinery under each of the following assumptions:

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

Equipment acquired at a cost of $126,000 has a book value of $42,000.Journalize the disposal of the equipment under the following independent assumptions. ​ Journal

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?

Though a piece of equipment is still being used,the equipment should be removed from the accounts if it has been fully depreciated.

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

A copy machine acquired on July 1 with a cost of $1,450 has an estimated useful life of 4 years.Assuming that it will have a residual value of $250,determine the depreciation for the first year by the double-declining-balance method.

Computer equipment was acquired at the beginning of the year at a cost of $63,000 that has an estimated residual value of $3,000 and an estimated useful life of 5 years.Determine the (a)depreciable cost (b)double-declining-balance rate,and (c)double-declining-balance depreciation for the first year.

A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 is sold for $3,500.What is the amount of the gain or loss on disposal of the fixed asset?

The method used to calculate the depletion of a natural resource is the straight-line method.

On the first day of the fiscal year,a new walk-in cooler with a list price of $58,000 was acquired in exchange for an old cooler and $44,000 cash.The old cooler had a cost of $25,000 and accumulated depreciation of $16,000. Assume the transaction has commercial substance.

Which of the following below is an example of a capital expenditure?

When a property,plant,and equipment asset is sold for cash,any gain or loss on the asset sold should be recorded.

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

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

When exchanging equipment,if the trade-in allowance is greater than the book value a loss results.

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.