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Exam 9: Long-Term Assets: Fixed and Intangible

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Question 31

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

A) ​depletion
B) ​allocation
C) ​amortization
D) ​depreciation

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

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Question 32

True/False

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Once the useful life of a depreciable asset has been estimated and the amount to be depreciated each year has been determined,the amounts cannot be changed.

A) True
B) False

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Question 33

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Eagle Country Club has acquired a lot to construct a clubhouse.Eagle had the following costs related to the construction: ​ Determine the cost of the club house to be reported on the balance sheet.

The difference between the balance in a fixed asset account and its related accumulated depreciation account is the asset's book value.

Which intangible assets are amortized over their useful life?

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

Identify each of the following expenditures as chargeable to (a)Land,(b)Land Improvements,(c)Buildings,(d)Machinery and Equipment,or (e)other account.

Capital expenditures are costs that improve a fixed asset or extend its useful life.

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?

If a fixed asset,such as a computer,were purchased on January 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150,the journal entry for monthly expense under straight-line depreciation is

Machinery was purchased on January 1 for $51,000.The machinery has an estimated life of 7 years and an estimated salvage value of $9,000.Double-declining-balance depreciation for the second year would be (round calculations to the nearest dollar) :

The acquisition costs of property,plant,and equipment should include all normal,reasonable and necessary costs to get the asset in place and ready for use.

Both the initial cost of the asset and the accumulated depreciation will be taken off the books with the disposal of the asset.

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.

Expected useful life is

When land is purchased to construct a new building,the cost of removing any structures on the land should be charged to the building account.

On June 1,Michael Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years or 30,000 hours. ​ Using straight-line depreciation,calculate depreciation expense for the second year.

Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended.

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

Williams Company acquired machinery on July 1,Year 1,at a cost of $130,000.The estimated useful life of the machinery was 10 years and the estimated residual value was $10,000.Williams uses the double-declining-balance method of depreciation.On October 1,Year 4,Williams sold the equipment for $75,000. ​ (a)Record the journal entry for the depreciation on this machinery for Year 4. ​(b)Record the journal entry for the sale of the machinery.