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Exam 9: Long-Term Assets: Fixed and Intangible

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Question 41

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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) gain of $20,000
B) gain of $30,000
C) loss of $20,000
D) loss of $30,000

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

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Question 42

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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.

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Question 43

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Computer equipment was acquired at the beginning of the year at a cost of $65,000 that has an estimated residual value of $3,800 and an estimated useful life of 8 years.Determine the (a)depreciable cost,(b)straight-line rate,and (c)annual straight-line depreciation.

On October 1,Sebastian Company acquired new equipment with a fair market value of $458,000.Sebastian received a trade-in allowance of $92,000 on the old equipment of a similar type and paid cash of $366,000.The following information about the old equipment is obtained from the account in the equipment ledger: Cost,$336,000; accumulated depreciation on December 31,the end of the preceding fiscal year,$220,000; annual depreciation,$20,000.Assuming the exchange has commercial substance,journalize the entries to record: (a)the current depreciation of the old equipment to the date of trade-in and (b)the exchange transaction on October 1.

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:

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

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

On December 31,Bowman Company estimated that goodwill of $80,000 was impaired.On June 1,a patent with an estimated useful economic life of 10 years was acquired for $252,000. ​ Required: (a)Journalize the adjusting entry on December 31 for the impaired goodwill. (b)Journalize the adjusting entry on December 31 for the amortization of the patent rights.

The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is

The depreciable cost of a building is the same as its acquisition cost.

The amount of depreciation expense for a fixed asset costing $95,000,with an estimated residual value of $5,000 and a useful life of 5 years or 20,000 operating hours,is $21,375 by the units-of-output method during a period when the asset was used for 4,500 hours.

On December 31,it was estimated that goodwill of $65,000 was impaired.On July 1,a patent with an estimated useful economic life of 10 years was acquired for $60,000.

When a seller allows a buyer an amount for old equipment that is traded in for new equipment of similar use,this amount is known as boot.

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

On December 31,Strike Company sold one of its batting cages for $55,000.The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000.Depreciation has been taken up to the end of the year.What is the amount of the gain or loss on this transaction?

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

Accumulated Depreciation

The double-declining-balance method is an accelerated depreciation method.

The depreciation method that does not use residual value in calculating the first year's depreciation expense is

If a fixed asset with a book value of $10,000 is traded for a similar fixed asset,a trade-in allowance of $15,000 is granted by the seller,and the transaction is deemed to have commercial substance,the buyer would report a gain on exchange of fixed assets of $5,000.