Exam 10: Long-Term Assets: Fixed and Intangible

Classify each of the following costs associated with long-lived assets as one of the following: -Costs to survey a new piece of land for a new business location

Classify each of the following costs associated with long-lived assets as one of the following: -Fees paid to architect to design new office building

Accumulated Depreciation

Which of the following statements is true?

Williams Company acquired machinery on July 1, Year 1, at a cost of $130,000. The estimated useful life of the machinery was 10 years, and the estimated residual value was $10,000. Williams uses the double-declining-balance method of depreciation. On October 1, Year 4, Williams sold the equipment for $75,000.​ (a) Record the journal entry for the depreciation on this machinery for Year 4. (b) Record the journal entry for the sale of the machinery.

On June 1, Aaron Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of three years and 30,000 hours, which ends on December 31.​Using straight-line depreciation, calculate depreciation expense for the final (partial) year of service.​

When exchanging equipment, if the trade-in allowance is greater than the book value a loss results.

Match the intangible assets described with their proper classification (a-d). ​ -A new kitchen gadget that can be produced by only one company

When land is purchased to construct a new building, the cost of removing any structures on the land should be charged to the building account.

Expenditures that add to the utility of fixed assets for more than one accounting period are

The cost of replacing an engine in a truck is an example of ordinary maintenance.

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

Both the initial cost of the asset and the accumulated depreciation will be taken off the books with the disposal of the asset.

A new machine with a purchase price of $109,000, with transportation costs of $12,000, installation costs of $5,000, and special acquisition fees of $6,000, would have a cost basis of

If a fixed asset with a book value of $10,000 is traded for a similar fixed asset, a trade-in allowance of $15,000 is granted by the seller, and the transaction is deemed to have commercial substance, the buyer would report a gain on exchange of fixed assets of $5,000.

Classify each of the following as: -Resurfacing a pool in an apartment building

Residual value is also known as all of the following except

When a seller allows a buyer an amount for old equipment that is traded in for new equipment of similar use, this amount is known as boot.

When selling a piece of equipment for cash, a loss will result when the proceeds of the sale are less than the book value of the asset.

Determine the depreciation for the year of acquisition and for the following year of a fixed asset acquired on October 1 for $500,000 with an estimated life of five years, and residual value of $50,000, using (a) the double-declining-balance method and (b) the straight-line method. Assume a fiscal year ending December 31.