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Exam 9: Long-Term Assets: Fixed and Intangible

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Question 51

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A machine costing $185,000 with a 5-year life and $20,000 residual value was purchased January 2.Compute depreciation for each of the five years,using the double-declining-balance method.

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Question 52

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Minerals removed from the earth are classified as intangible assets.

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B) False

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Question 53

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Solare Company acquired mineral rights for $60,000,000.The diamond deposit is estimated at 6,000,000 tons.During the current year,2,300,000 tons were mined and sold.

Intangible assets differ from property,plant,and equipment assets in that they lack physical substance.

The amount of depreciation expense for the first full year of use of a fixed asset costing $95,000,with an estimated residual value of $5,000 and a useful life of 5 years,is $19,000 by the straight-line method.

When depreciation estimates are revised,all years of the asset's life are affected.

The Weber Company purchased a mining site for $1,750,000 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.The estimated residual value of the property is $150,000.During the first year,the company extracted 6,500 tons of ore.The depletion expense is

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.Determine the cost of the land to be reported on the balance sheet and show your work.

Identify the following as a fixed asset (FA),or intangible asset (IA),natural resource (NR),or none of these(N)

When a company exchanges machinery and receives a trade-in allowance greater than the book value,this transaction would be recorded with which of the following entries (assuming the exchange was considered to have commercial substance) ?

Land acquired so it can be resold in the future is listed on the balance sheet as a(n)

Revising depreciation estimates affects the amounts of depreciation expense recorded in past periods.

​Sands Company purchased mining rights for $500,000.They expect to harvest 1 million tons of ore over the next five years.During the current year,Sands mined 350,000 tons of ore.The entry to record the depletion would include

A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours.It is to be depreciated by the units-of-output method.What is the amount of depreciation for the second full year,during which the machine was used 5,000 hours?

On June 1,Aaron 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 and 30,000 hours,which ends on December 31. ​ Using straight-line depreciation,calculate depreciation expense for the final (partial) year of service. ​

Equipment was acquired at the beginning of the year at a cost of $75,000.The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,500.

Which of the following should be included in the acquisition cost of a piece of equipment?

The natural resources of some companies include​

Equipment with a cost of $220,000 has an estimated residual value of $30,000 and an estimated life of 10 years or 19,000 hours.It is to be depreciated by the straight-line method.What is the amount of depreciation for the first full year,during which the equipment was used 2,100 hours?

Which of the following is included in the cost of constructing a building?