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Exam 9: Long-Term Assets: Fixed and Intangible

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Question 71

Multiple Choice

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Computer equipment was acquired at the beginning of the year at a cost of $57,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years.Determine the second-year depreciation using the straight-line method.

A) $13,200
B) $19,200
C) $9,600
D) $9,000

E) B) and C)
F) A) and B)

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Question 72

Multiple Choice

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The calculation for annual depreciation using the units-of-output method is

A) (Initial cost / Estimated output) × Actual yearly output
B) (Depreciable cost / Yearly output) × Estimated output
C) Depreciable cost / Yearly output
D) (Depreciable cost / Estimated output) × Actual yearly output

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

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Question 73

True/False

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It is not necessary for a company to use the same depreciation method for financial statements and for determining income taxes.

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

The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called

The calculation for annual depreciation using the straight-line depreciation method is

Machinery is purchased on July 1 of the current fiscal year for $240,000.It is expected to have a useful life of 4 years,or 25,000 operating hours,and a residual value of $15,000.Compute the depreciation for the last six months of the current fiscal year ending December 31 by each of the following methods: ​

A building with an appraisal value of $154,000 is made available at an offer price of $172,000.The purchaser acquires the property for $40,000 in cash,a 90-day note payable for $45,000,and a mortgage amounting to $75,000.The cost basis recorded in the buyer's accounting records to recognize this purchase is

On December 31,Strike Company sold one of its batting cages for $50,000.The equipment had an original cost of $310,000 and has 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?

Champion Company purchased and installed carpet in its new general offices on March 31 for a total cost of $18,000.The carpet is estimated to have a 15-year useful life and no residual value. ​

The name,term,or symbol used to identify a business and its products is called

Which of the following statements is true?

An estimate of the amount for which an asset can be sold at the end of its useful life is called residual value.

A copy machine acquired on May 1 with a cost of $2,545 has an estimated useful life of 3 years.Assuming that it will have a residual value of $445,determine the depreciation for the first and second year by the straight-line method.Round your answers to the nearest whole dollar.

​Newport Company has sales of $2,025,000 for the current year.The book value of its fixed assets at the beginning of the year was $550,000 and at the end of the year was $800,000.The fixed asset turnover ratio for Newport is

XYZ Co.incurred the following costs related to the office building used in operating its sports supply company: ​ Classify each of the costs as a capital expenditure or a revenue expenditure.

A used machine with a purchase price of $77,000,requiring an overhaul costing $8,000,installation costs of $5,000,and special acquisition fees of $3,000,would have a cost basis of

Prior to adjustment at the end of the year,the balance in Trucks is $300,900 and the balance in Accumulated Depreciation-Trucks is $88,200.Details of the subsidiary ledger are as follows: ​ ​ Required:

Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two categories

Computer equipment (office equipment)purchased 6 1 / 2 years ago for $170,000,with an estimated life of 8 years and a residual value of $10,000,is now sold for $60,000 cash.(Appropriate entries for depreciation had been made for the first six years of use.)Journalize the following entries: