Exam 9: Reporting and Analyzing Long-Lived Assets

Equipment with a cost of $320,000 has an estimated salvage value of $30,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,000 hours?

The depreciable cost of a plant asset is its original cost minus obsolescence.

The following information is provided for Nguyen Company and Northwest Corporation. If Nguyen and Northwest are in the same industry and the industry average for return on assets is equal to 30%, which of the following statements is true?

Pearson Company bought a machine on January 1, 2014. The machine cost $144,000 and had an expected salvage value of $24,000. The life of the machine was estimated to be 5 years. The depreciable cost of the machine is

Goodwill is an unusual asset in that it cannot be sold individually apart from a business as a whole. If goodwill is an intangible asset, why can't it be sold like other intangible assets such as copyrights and patents? Briefly explain what makes goodwill different.

Grant Company has decided to change the estimate of the useful life of an asset that has been in service for 2 years. Which of the following statements describes the proper way to revise a useful life estimate?

The following information is provided for Nguyen Company and Northwest Corporation. What is Northwest's return on assets for 2014?

Under an operating lease, both the leased asset and the liability are shown on the balance sheet.

Pearson Company bought a machine on January 1, 2014. The machine cost $144,000 and had an expected salvage value of $24,000. The life of the machine was estimated to be 5 years. The book value of the machine at the beginning of the third year would be

Franchises are classified as a plant asset.

Presented below is information related to plant assets and intangible assets at year end on December 31, 2014, for Looper Company: Instructions Prepare a partial balance sheet for Looper Company that shows how the above listed items would be presented.

Which of the following is not considered an intangible asset?

Which of the following methods of computing depreciation is production based?

Sprague Associates sold office furniture for $32,000. The furniture had an original cost of $96,000 and accumulated depreciation of $48,000. Ignoring the tax effect, as a result of the sale

On November 1, 2013, Love Company places a new asset into service. The cost of the asset is $45,000 with an estimated 5-year life and $5,000 salvage value at the end of its useful life. What is the depreciation expense for 2014 if Love Company uses the straight-line method of depreciation?

A permanent decline in the market value of an asset is referred to as an impairment.

A plant asset was purchased on January 1 for $75,000 with an estimated salvage value of $15,000 at the end of its useful life. The current year's Depreciation Expense is $5,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $25,000. The remaining useful life of the plant asset is

A plant asset cost $128,000 and is estimated to have a $16,000 salvage value at the end of its 8-year useful life. The annual depreciation expense recorded for the third year using the double-declining-balance method would be

On July 1, 2014, Dillman Kennels sells equipment for $66,000. The equipment originally cost $180,000, had an estimated 5-year life and an expected salvage value of $30,000. The Accumulated Depreciation account had a balance of $105,000 on January 1, 2014, using the straight-line method. The gain or loss on disposal is

When an asset is sold, a gain occurs when the