Exam 9: Long-Lived Tangible and Intangible Assets

If a company produces the same number of units per period over an asset's useful life,straight-line depreciation expense per period will be the same as the depreciation expense recorded using the units-of-production method.

Martinez,Inc.acquired a patent on January 1,2014 for $40,000 cash.The patent was estimated to have a useful life of 10 years.At the end of 2016 it appeared that the total useful life would be only 7 years and the amortization rate was revised accordingly.On June 30,2018,the patent was sold for $20,000. a.Prepare the journal entry to record the acquisition of the patent on January 1,2014. b.Prepare the journal entry to record the annual amortization for 2015. c.Compute the amount of amortization that would be recorded in 2017. d.Record the sale of the patent on June 30,2018.

A company buys equipment for $48,000 and expects to use it for ten years and then sell it for $6,000.Using the straight-line method,the company should report depreciation for the equipment of:

Your company buys a computer server which it expects to use for eight years and then sell when it upgrades to a more powerful model.The server would probably be used by the business that buys it at that time for another three years.The useful life of the server for your company is:

Company A uses an accelerated depreciation method while Company B uses the straight-line method.All other things being equal,during the first few years of the asset's use,Company B will show which of the following compared to Company A?

If average net fixed assets decrease,then the fixed asset turnover ratio will increase,assuming nothing else changes.

Company A uses an accelerated depreciation method while Company B uses the straight-line method for an asset of the same cost and useful life.Which of the following statements is true?

Which of the following statements regarding tangible long-lived assets is not correct?

Extraordinary repairs,replacements,and additions are added to the appropriate asset accounts rather than being recorded as expenses.

Which of the following assets would be amortized?

Purrfect Pets has a facility that originally cost $375,000.The balance of the accumulated depreciation account for the facility is $258,000.The company expects to be able to sell the facility for $107,000 at the end of its useful life.The residual value of the facility is:

A real estate management company buys an abandoned apartment complex for $4.5 million.It pays a construction company $500,000 to demolish the entire building.Which of the following is true?

Your company pays $620,000 for a patent that has 10 years remaining.Each year,your company should:

When an asset is sold and its book value exceeds its selling price,net income will increase.

A company purchased property for $100,000.The property included a building,equipment and land.The building was appraised at $62,000,the land at $45,000,and the equipment at $18,000.What is the amount of cost to be allocated to the building in the accounting records?

When estimated useful life of an asset is revised:

Extraordinary repairs

The MegaHit Film Studio has a licensing right (or agreement)to distribute films produced by the Artsy Film Company.How would the MegaHit Company classify this licensing right on its balance sheet?

The useful life of an asset is always measured in units of time,such as years or months.

Company A uses an accelerated depreciation method while Company B uses the straight-line method for an asset of the same cost and useful life.Other things being equal,which of the following is true?