Exam 9: Reporting and Interpreting Long-Lived Tangible and Intangible Assets

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?

Trademarks and Goodwill are intangible assets that are not amortized.

A truck costing $12,000, on which $9,000 of accumulated depreciation has been recorded was sold for $2,000 cash. The entry to record this event would include a:

If a fully depreciated asset with no residual value is retired without receiving any cash on retirement:

Paul Hauling has a fleet of 10 large trucks that cost a total of $1,410,000. The fleet is expected to provide 1,000,000 miles of transportation during an estimated 10-year life, and be sold for 10% of the original cost at the end of that time. If the fleet traveled 125,000 miles in the current twelve-month period, what would be the depreciation expense under the straight-line (SL) and units-of-production (U-of-P) methods?

On January 1, 2011, Horton Inc. sells a machine for $23,000. The machine was originally purchased on January 1, 2009 for $40,000. The machine was estimated to have a useful life of 5 years and a salvage value of $0) Horton uses straight-line depreciation. In recording this transaction:

Which of the following statements is true when the straight-line method is used to compute depreciation?

A company paid $17,000 for a vehicle that had an estimated useful life of 4 years, total capacity of 100,000 miles, and a residual value of $1,000. After 2 full years of using the vehicle (20,000 miles in year 1 and 27,000 miles in year 2), the company sold the vehicle for $6,000 and reported a loss on disposal of $3,480. What method of depreciation did the company use?

Ordinary repairs and maintenance always:

The undepreciated cost of an asset is referred to as

If a company capitalizes costs that should be expensed, how is its income statement for the current period impacted?

Which of the following is true about the depreciation recorded?

Under the cost principle, a company capitalizes:

Under what circumstances should a company record an asset impairment loss?

ShadyZ Corporation uses the unit-of-production method to estimate depreciation. A new asset is purchased for $18,000 that willproduce an estimated 100,000 units over its useful life. Estimated residual value is $2,000. What is the depreciation rate per unit?

What is the depreciation expense for the first year using the double-declining-balance method?

Which of the following statements is true?

Depreciation measures the actual decline in the market value of an asset.

Which of the following statements regarding capitalization is correct?

Your company has net sales revenue of $36 million during the year. At the beginning of the year, fixed assets are $8 million. At the end of the year, fixed assets are $10 million. What is the fixed asset turnover ratio?