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

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?

When a company sells a long-lived asset, stockholders' equity will change by the:

A declining fixed asset turnover ratio suggests that a:

Land is not subject to depreciation so that means that items that increase the usefulness of the land, such as parking lots, are not depreciated.

A company purchases property that includes land, buildings and equipment for $5.5 million. The company pays $180,000 in legal fees, $220,000 in commissions, and $100,000 in appraisal fees. The land is estimated at 25%, the buildings are at 40%, and the equipment at 35% of the property value. Prepare the journal entry that is required to record the purchase assuming that the company paid 50% of the amounts using cash and signed a note for the remainder. Explain how you derived your answer.

If average net fixed assets decrease, then the fixed asset turnover ratio will increase, assuming all other things equal.

When estimated useful life of an asset is revised:

Companies within the same industry do not always use the same depreciation method, but will use the same expected useful life for the same piece of equipment.

The purpose of depreciation is to correctly value assets.

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?

Tax accounting and financial accounting use the same depreciation calculations and there are no differences in the results between the two accounting systems.

Many companies use accelerated depreciation in computing taxable income because

Identify the category to which each of the following assets belongs.

Which of the following is not an amount that is needed to calculate straight-line depreciation?

If an asset value increases, what is the amount of the increase that is recognized according to GAAP?

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 Widget Tool and Die Company buys a $400,000 stamping machine that has an estimated residual value of $20,000. The company expects the machine to produce two million units. It makes 400,000 units during the current period. If the units-of-production method is used, the depreciation expense for this period is:

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

When a company sells equipment for cash on a date other than the last day of the accounting period, it must:

A fixed asset turnover ratio of 4.3 indicates that for every