Exam 9: Long-Term Assets: Fixed and Intangible

Fixed assets are ordinarily presented on the balance sheet

The amount of depreciation expense for a fixed asset costing $95,000, with an estimated residual value of $5,000 and a useful life of 5 years or 20,000 operating hours, is $21,375 by the units-of-output method during a period when the asset was used for 4,500 hours.

On July 1, Andrew Company purchased equipment at a cost of $150,000 that has a depreciable cost of $120,000 and an estimated useful life of 3 years or 60,000 hours.​ Using straight-line depreciation, prepare the journal entry to record depreciation expense for (a) the first year, (b) the second year, and (c) the last year.

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 5 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.

On June 1, Scotter Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years or 30,000 hours.​ Using straight-line depreciation, calculate depreciation expense for the first year, which ends on December 31.

On the first day of the fiscal year, a new walk-in cooler with a list price of $58,000 was acquired in exchange for an old cooler and $44,000 cash. The old cooler had a cost of $25,000 and accumulated depreciation of $16,000.Assume the transaction has commercial substance.(a)Determine the gain to be recorded on the exchange.(b)Journalize the entry to record the exchange.

The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is the

Classify each of the following costs associated with long-lived assets as one of the following: -Cost of installing new equipment A)Land improvements B)Buildings C)Land D)Machinery and equipment

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 3 years and 30,000 hours, which ends on December 31.​ Using straight-line depreciation, calculate depreciation expense for the final (partial) year of service.​

Machinery acquired at a cost of $80,000 and on which there is accumulated depreciation of $55,000 (including depreciation for the current year to date) is exchanged for similar machinery. Assume that the transaction has commercial substance. For financial reporting purposes, present entries to record the exchange of the machinery under each of the following assumptions: (a)Price of new, $120,000; trade-in allowance on old, $4,000; balance paid in cash.(b)Price of new, $120,000; trade-in allowance on old, $34,000; balance paid in cash.

An estimate of the amount for which an asset can be sold at the end of its useful life is called residual value.

Classify each of the following costs associated with long-lived assets as one of the following: -Cost of grading and leveling land to be used for a new business site A)Land improvements B)Buildings C)Land D)Machinery and equipment

All property, plant, and equipment assets are depreciated over time.

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.

A building with an appraisal value of $154,000 is made available at an offer price of $172,000. The purchaser acquires the property for $40,000 in cash, a 90-day note payable for $45,000, and a mortgage amounting to $75,000. The cost basis recorded in the buyer's accounting records to recognize this purchase is

When the amount of use of a fixed asset varies from year to year, the method of determining depreciation expense that best matches allocation of cost with revenue is

Match each account name to the financial statement section (a-i) in which it would appear. -Accumulated Depreciation-Buildings A)Current Assets B)Fixed Assets C)Intangible Assets D)Current Liability E)Long-Term Liability F)Owners' Equity G)Revenues H)Operating Expenses I)Other Income/Expense

Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of 5 years, or 14,000 operating hours, and a residual value of $10,000. Compute the depreciation for the first and second years of use by each of the following methods: (a)straight-line (b)units-of-output (1,200 hours first year; 2,250 hours second year)(c)double-declining-balance

Which of the following statements is true?

Classify each of the following as: -Exterior and interior painting A)Ordinary maintenance and repairs B)Asset improvements C)Extraordinary repairs