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Exam 9: Fixed Assets and Intangible Assets

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Question 31

True/False

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The method used to calculate the depletion of a natural resource is the straight line method.

A) True
B) False

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Question 32

Multiple Choice

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On December 31, Strike Company has decided to trade-in one of its batting cages for another one that has a cost of $500,000. The seller of the batting cage is willing to allow a trade-in amount of $11,000. The initial cost of the old equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. The difference will be paid in cash. What is the amount of the gain or loss on this transaction?

A) Loss of $11,000
B) Gain of $11,000
C) Loss of $19,000
D) No loss or gain will be recorded.

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

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Question 33

Multiple Choice

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A fixed asset with a cost of $52,000 and accumulated depreciation of $47,500 is traded for a similar asset priced at $60,000 in a transaction with commercial substance. Assuming a trade-in allowance of $5,000, the cost basis of the new asset is

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

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

Capital expenditures are costs of acquiring, constructing, adding, or replacing property, plant and equipment.

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

A capitalized asset will appear on the balance sheet as a long term asset.

All leases are classified as either

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

Accumulated Depreciation

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-production method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

A machine costing $57,000 with a 6-year life and $54,000 depreciable cost was purchased January 1, 2015. Compute the yearly depreciation expense using straight-line depreciation.

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

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

What is the cost of the land, based upon the following data?

On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $310,000 with an accumulated depreciation of $260,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $55,000. What is the amount of the gain or loss on this transaction?

The cost of repairing damage to a machine during installation is debited to a fixed asset account.

All property, plant, and equipment assets are depreciated over time.

All of the following below are needed for the calculation of straight-line depreciation except