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

Busy Beaver,Inc.signed a $315,000,5-year note payable to buy a new industrial veneer cutter.Busy Beaver paid $5,000 cash for transportation of the machine and $750 cash for installation costs.What is the overall effect of this transaction on the accounting equation?

The useful life of an asset is always measured in units of time,such as years or months.

Accumulated Depreciation:

The proper accounting for natural resources is to record the original cost as an:

In recording the acquisition cost of an entire business:

Acme Enterprises just bought a new manufacturing machine.Which of these costs should not be capitalized?

ABC Co.purchased a parcel of land for $300,000.It paid attorney fees of $2,000 to verify title to the land.In addition,it paid a broker's fee of $5,000 to help find a suitable parcel of land.This parcel of land should be recorded in the accounting records for:

Executives at WorldCom committed an $11 billion fraud by capitalizing costs that should have been expensed.This fraud had many effects on WorldCom's balance sheet.Which of the following does not describe one of the misstatements that resulted on the company's balance sheet?

If a fully depreciated asset with no residual value is "retired" to a junk yard without receiving any cash:

Use the information above to answer the following question.What is the depreciation expense for the first year using the double-declining-balance method?

A machine had an estimated useful life of 5 years,but after 3 years,it was decided that the original estimate of useful life should have been 10 years.At that point,the remaining cost to be depreciated should be allocated over the remaining:

The cost of a new building that is currently under construction,not for sale but for a company's own use,is reported on the balance sheet:

Sunny Sky paid $30,000 cash for piece of land to be used for a new corporate headquarters building.What is the effect of this transaction on the accounting equation?

The Tasman Company purchased land for $150,000.The cost to demolish the existing building and prepare the land for a new building was $20,000.The real estate commission paid to buy the land was $9,000.What amount should be recorded in Tasman's accounting records for the cost of the land?

On January 1,2017,Whittle,Inc.purchased timber rights for $1,500,000.It is expected to produce a total of 2,000,000 cords of wood over 4 years.The cords of wood cut were 200,000 in 2017.The effect of recording the 2017 depletion (not the sale of the wood)on the accounting equation is:

Accumulated Depreciation is classified as a(n):

Use the information above to answer the following question.Which of the following is correct about the depreciation recorded?

On September 1,2017,Acme,Inc,sold its sales manager's company car.The car was purchased in 2010 and was not yet fully depreciated.How many months of depreciation expense should Acme record on the car for the year ended December 31,2017?

Many companies use accelerated depreciation in computing taxable income because:

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 correct?