Exam 9: Long-Term Assets: Fixed and Intangible

Classify each of the following costs associated with long-lived assets as one of the following: -Purchase price of land purchased for new business site A)Buildings B)Machinery and equipment C)Land D)Land improvements

Computer equipment was acquired at the beginning of the year at a cost of $65,000 that has an estimated residual value of $3,800 and an estimated useful life of 8 years. What is the annual straight-line depreciation for the equipment?

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

What is 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 the straight-line method. Assume a fiscal year ending December 31.

On October 1, Sebastian Company acquired new equipment with a fair market value of $458,000. Sebastian received a trade-in allowance of $92,000 on the old equipment of a similar type and paid cash of $366,000. The following information about the old equipment is obtained from the account in the equipment ledger: Cost, $336,000; accumulated depreciation on December 31, the end of the preceding fiscal year, $220,000; annual depreciation, $20,000. Assuming the exchange has commercial substance, journalize the entries to record: (a) the current depreciation of the old equipment to the date of trade-in and (b) the exchange transaction on October 1.

Match the intangible assets described with their proper classification (a-d).​ -Rights to sell a book and make a profit A)Patent B)Copyright C)Trademark D)Goodwill

The depreciable cost of a building is the same as its acquisition cost.

When a company establishes an outstanding reputation and has a competitive advantage because of it, the company should record goodwill on its financial statements.

An intangible asset is one that has a physical existence.

Equipment acquired on January 2, Year 1, at a cost of $525,000 has an estimated useful life of eight years and an estimated residual value of $45,000.Required: (a)What is the annual amount of depreciation for the first three years, assuming the straight-line method of depreciation is used? (b)What is the book value of the equipment on January 1, Year 4? (c)Assuming that the equipment is sold on January 2, Year 4, for $326,000, journalize the entry to record the sale.(d)Assuming that the equipment is sold on January 2, Year 4, for $394,000, journalize the entry to record the sale.

Golden Sales has bought $135,000 in fixed assets on January 1st associated with sales equipment. The residual value of these assets is estimated at $10,000 at the end of their 4-year service life. Golden Sales managers want to evaluate the options of depreciation.​ (a) Compute the annual straight-line depreciation and provide the sample depreciation journal entry to be posted at the end of each of the years.(b) Write the journal entries for each year of the service life for these assets using the double-declining balance method.

It is not necessary for a company to use the same depreciation method for financial statements and for determining income taxes.

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

A lathe priced at a fair market value of $124,000 is acquired in a transaction that has commercial substance by trading in a similar lathe and paying cash for the difference between the trade-in allowance of $45,000 and the price of the new lathe.​ (a) What is the amount of cash given? (b) Assuming that the book value of the lathe traded in is $36,000, what is the gain or loss on the exchange?

Computer equipment (office equipment) purchased 6 1/2 years ago for $170,000, with an estimated life of 8 years and a residual value of $10,000, is now sold for $60,000 cash. (Appropriate entries for depreciation had been made for the first six years of use.) Journalize the following entries: (a)Record the depreciation for the one-half year prior to the sale, using the straight-line method.(b)Record the sale of the equipment.(c)Assuming that the equipment had been sold for $25,000 cash, prepare the entry to record the sale.

Once the useful life of a depreciable asset has been estimated and the amount to be depreciated each year has been determined, the amounts cannot be changed.

Match the intangible assets described with their proper classification (a-d).​ -Reputation of a company A)Patent B)Copyright C)Trademark D)Goodwill

Match each account name to the financial statement section (a-i) in which it would appear. -Loss from Impaired Goodwill 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

A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 is sold for $3,500. What is the amount of the gain or loss on disposal of the fixed asset?

The natural resources of some companies include