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Exam 9: Fixed Assets and Intangible Assets

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Question 1

True/False

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Though a piece of equipment is still being used,the equipment should be removed from the accounts if it has been fully depreciated.

A) True
B) False

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Question 2

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When exchanging equipment,if the trade-in allowance is greater than the book value a loss results.

A) True
B) False

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Question 3

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The Bacon Company acquired new machinery with a price of $15,200 by trading in similar old machinery and paying $12,700.The old machinery originally cost $9,000 and had accumulated depreciation of $5,000.In recording this transaction,Bacon Company should record

A copy machine acquired with a cost of $1,410 has an estimated useful life of 4 years. It is also expected to have a useful operating life of 13,350 copies.Assuming that it will have a residual value of $75,determine the depreciation for the first year by the

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

A machine costing $85,000 with a 5-year life and $5,000 residual value was purchased January 2,2011.Compute depreciation for each of the five years,using the declining-balance method at twice the straight-line rate.

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.For those costs identified as capital expenditures,classify each as an additional or replacement component.

Machinery acquired at a cost of $80,000 and on which there is accumulated depreciation of $55,000 (including depreciation for the current year to date)is exchanged for similar machinery.For financial reporting purposes,present entries to record the disposition of the old machinery and the acquisition of new machinery under each of the following assumptions:

Equipment with a cost of $160,000,an estimated residual value of $40,000,and an estimated life of 15 years was depreciated by the straight-line method for 4 years.Due to obsolescence,it was determined that the useful life should be shortened by 3 years and the residual value changed to zero.The depreciation expense for the current and future years is

A gain can be realized when a fixed asset is discarded.

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-production method during a period when the asset was used for 4,500 hours.

When old equipment is traded in for a new equipment,the difference between the list price and the trade in allowance is called boot.

Which of the following is included in the cost of land?

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

When a major corporation develops its own trademark and over time it becomes very valuable,the trademark may not be shown on their balance sheet due to lack of a material cost.

An asset was purchased for $120,000 on January 1,2010 and originally estimated to have a useful life of 10 years with a residual value of $10,000.At the beginning of 2012,it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,000.Calculate the 2012 depreciation expense using the revised amounts and straight line method.

Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended.

Assets may be grouped according to common traits and depreciated by using a single composite rate.

An asset was purchased for $58,000 and originally estimated to have a useful life of 10 years with a residual value of $3,000.After two years of straight line depreciation,it was determined that the remaining useful life of the asset was only 2 years with a residual value of $2,000. a)Determine the amount of the annual depreciation for the first two years. b)Determine the book value at the end of the 2nd year. c)Determine the depreciation expense for each of the remaining years after revision.

Long lived assets held for sale are classified as fixed assets.