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Exam 10: Long-Term Assets: Fixed and Intangible

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Question 41

Multiple Choice

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Classify each of the following costs associated with long-lived assets as one of the following: -Walkways to surround new business location

A) Land improvements
B) Buildings
C) Land
D) Machinery and equipment

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

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Question 42

Multiple Choice

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Classify each of the following as: -Overhauling an engine in a large truck

A) Ordinary maintenance and repairs
B) Asset improvements
C) Extraordinary repairs

D) A) and B)
E) All of the above

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Question 43

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Capital expenditures are costs that are charged to stockholders' equity accounts.

Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of five years,or 14,000 operating hours,and a residual value of $10,000.Compute the depreciation for the first and second years of use by each of the following methods:​

Computer equipment (office equipment)purchased 6½ years ago for $170,000,with an estimated life of eight 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:

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

Classify each of the following costs associated with long-lived assets as one of the following: -Cost assessed by city for paving a public street that borders land on which a new business location will be constructed

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.

Match the intangible assets described with their proper classification (a-d) . ​ -Rights to sell a book and make a profit

Expenditures that increase operating efficiency or capacity for the remaining useful life of a fixed asset are called capital expenditures.

Carter Co.acquired drilling rights for $18,550,000.The oil deposit is estimated at 74,200,000 gallons.During the current year,6,000,000 gallons were drilled.Journalize the adjusting entry at December 31 to recognize the depletion expense.Journal

The natural resources of some companies include

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

Match the intangible assets described with their proper classification (a-d) . ​ -Mickey Mouse

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.​

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.

During construction of a building,the cost of interest on a construction loan should be charged to an expense 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 three years or 30,000 hours.​Using straight-line depreciation,calculate depreciation expense for the second year.

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

Golden Sales has bought $135,000 in fixed assets on January 1 associated with sales equipment.The residual value of these assets is estimated at $10,000 at the end of their four-year service life.Golden Sales managers want to evaluate the options of depreciation.​ (a)Compute the annual straight-line depreciation and provide the sample depreciation journal entry to be postedat the end of each of the years. (b)Write the journal entries for each year of the service life for these assets using the double-declining-balancemethod.