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Exam 10: Fixed Assets and Intangible Assets

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Question 61

Multiple Choice

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In a lease contract, the party who legally owns the asset is the

A) lessee
B) lessor
C) operator
D) banker

E) All of the above
F) A) and C)

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Question 62

Multiple Choice

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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.

A) $25,000
B) $11,000
C) $24,000
D) $24,500

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

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Question 63

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On July 1, 2010, Howard Co. acquired patents rights for $40,000. The patent has a useful life of 8 years and a legal life of 15 years. Journalize the adjusting entry on December 31, 2010 to recognize the amortization. Journal

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

To a major resort, timeshare properties would be classified as property, plant and equipment.

Accumulated Depreciation

A characteristic of a fixed asset is that it is

The journal entry for recording an operating lease payment would

The amount of the depreciation expense for the second full year of use of a fixed asset costing $100,000, with an estimated residual value of $5,000 and a useful life of 4 years, is $25,000 by the declining-balance method at twice the straight-line rate.

Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of 5 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: (Round the answer to the nearest dollar.)

Which of the following is true?

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

Computer equipment was acquired at the beginning of the year at a cost of $65,000 that has an estimated residual value of $3,800 and an estimated useful life of 8 years. Determine the (a) depreciable cost, (b) straight-line rate, and (c) annual straight-line depreciation.

Convert each of the following estimates of useful life to a straight-line depreciation rate, stated as a percentage.

The depreciable cost of a building is the same as its acquisition cost.

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

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.

Copy equipment was acquired at the beginning of the year at a cost of $72,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years. It is estimated that the machine has an estimated 1,000,000 copies. This year 315,000 copies were made. Determine the (a) depreciable cost, (b) depreciation rate, and (c) the units-of-production depreciation for the year.

When a company sells machinery at a price equal to its book value, this transaction would be recorded with an entry that would include the following:

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