Exam 8: Fixed Assets and Intangible Assets

Marshall Company purchased a truck for deliveries for $25,000 at the beginning of 2011. The truck had an estimated life of 5 years, and an estimated salvage value of $5,000. Marshall used the straight-line depreciation method. At the beginning of 2012, Marshall incurred $4,000 to replace the truck's transmission. This resulted in a 2-year extension of the truck's useful life, but no change in the residual value.

Using the straight-line depreciation method will cause a company to incur ____ tax expense in the early years of an asset's life than they would experience using an accelerated method of depreciation.

A disposal of a used delivery truck is a transaction shown on the statement of cash flows under:

____________________ refers to the market value of the asset at the end of its useful life.

Which of the following is not an investing activity?

Gump Shrimp Company On January 1, 2011, Gump Shrimp Company purchased a ship for $1,000,000. It has a ten-year useful life and a salvage value of $100,000. The company uses the double-declining-balance method. - Refer to the information provided for Gump Shrimp Company. What was the depreciation expense for Gump Shrimp for the year ended December 31, 2011?

Depreciation is a process by which:

Hit and Miss, Inc. purchased a patent at the beginning of 2011 for $250,000. Economic benefits were expected for 10 years, but the patent's legal life was 20 years. Also during 2011, the company incurred research and development costs of $270,000. Patent amortization expense for 2011 is:

Max's Tire Center Company Selected data from the financial statements of Max's Tire Center are provided below. - Refer to the selected data provided for Max's Tire Center. Which of the following would result from a horizontal analysis of Max's balance sheet?

Which of the following should be included in the acquisition cost of a piece of equipment?

Complete the following statements regarding depreciation: ____________________ is the depreciation method used most frequently. ____________________ is the depreciation method considered "accelerated".

On January 1, 2011, XYZ Corporation sold a piece of equipment for $30,000 which it had used for several years. The equipment had cost $45,000, and its accumulated depreciation amounted to $20,000 at the time of the sale. What are the net effects on the accounting equation of selling the equipment?

Aggie, Inc. Aggie, Inc. purchased a truck at a cost of $12,000. The truck has an estimated salvage value of $2,000 and an estimated life of 5 years, or 100,000 hours of operation. The truck was purchased on January 1, 2011, and was used 27,000 hours in 2011 and 26,000 hours in 2012. - Refer to Aggie, Inc.'s information presented above, if Aggie uses the units-of-activity method, what is the depreciation rate per hour for the equipment?

Max's Tire Center Company Selected data from the financial statements of Max's Tire Center are provided below. -Refer to the selected data provided for Max's Tire Center. Which of the following would result from a vertical analysis of Max's income statement in 2012?

Everett, Inc. Information for Everett, Inc. for 2011 and 2010 is presented below. Everett uses the straight-line depreciation method. - Refer to the information provided for Everett, Inc. Using the data for 2011, determine the average useful life of Everett's fixed assets rounded to one decimal place.

Which of the following is included in the cost of constructing a building?

Wilshire purchased equipment at the beginning of 2011 for $19,000. Wilshire decided to depreciate the equipment over a 6-year period using the straight-line method. Wilshire estimated the equipment's salvage value at $1,000. The estimated fair market value at the end of 2011 was $18,000. Which of the following statements is correct concerning Wilshire's financial statements at December 31, 2011?

Disc Company purchased equipment at the beginning of 2010 for $200,000. The company decided to depreciate the equipment over an 5-year period using the straight-line method. The company estimated the equipment's salvage value at $20,000. The journal entry to record depreciation expense for 2011 is a debit to:

Baxter Tile, Inc. purchased new trucks at the beginning of 2011 for $400,000. The trucks had an estimated life of 5 years and an estimated salvage value of $50,000. Baxter Tile uses straight-line depreciation. At the beginning of 2012, Baxter sold the trucks for $350,000 and purchased new trucks for $500,000. Determine the following amounts:

On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $250,000 with an accumulated depreciation of $210,000. Depreciation has been taken up to the end of the year. Strike found a company that is willing to buy the equipment for $25,000. What is the amount of the gain or loss on this transaction?