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

On January 1,2016,Horton Inc.sells a machine for $23,000.The machine was originally purchased on January 1,2014 for $40,000.The machine was estimated to have a useful life of 5 years and a residual value of $0.Horton uses straight-line depreciation.In recording this transaction:

A company buys equipment for $48,000,expects to use it for ten years,and then sell it for $6,000.Using the straight-line method,the company should report annual depreciation for the equipment of:

The calculation for depletion of natural resources is similar to the calculation for depreciation when the units-of-production method is used.

Which of the following is the depreciation formula for the revision of an estimate?

A company purchased property for $100,000.The property included a building,equipment and land.The building was appraised at $62,000,the land at $45,000,and the equipment at $18,000 for a total appraised value of $125,000.What is the amount of cost to be allocated to the building in the accounting records?

Your company pays $620,000 for a patent that has 10 years remaining.Each year,your company should:

A company purchased land for its natural resources at a cost of $1,500,000.It expects to mine 2,000,000 tons of ore from this land.The residual value of the land is estimated to be $250,000.What is the amount of depletion per ton of ore?

Which of the following statements most appropriately describes the purpose of depreciating a long-lived tangible asset?

A truck costing $12,000,which has Accumulated Depreciation of $9,000,was sold for $2,000 cash.The entry to record this event would include a:

Which of the following statements about capitalized costs and expenses is correct?

Which of the following terms does not mean the same as the others?

On January 1,2014,Xit Company bought a new delivery truck for $30,000.Xit plans to use the truck for 4 years,after which it will be sold for $6,000.Depreciation expense for 2017,the fourth year of use,using double-declining-balance equals:

When assets are purchased as a group,the total cost must be divided up and allocated to each asset in proportion to the market value of the assets as a whole.

On January 1,Baker Co.purchased equipment for $100,000.It has an estimated useful life of five years and its residual value is $10,000.The company has a calendar year-end.Using the straight-line method,depreciation expense for the first year of its life equals:

Choose the appropriate letter of the explanation to match the term.Not all explanations will be used. Term 1._____ Long-lived assets 2._____ Average net fixed assets 3._____ Capitalization of cost 4._____ Units-of-production method 5._____ Carrying value 6._____ Asset impairment loss 7._____ Depreciation 8._____ Net sales revenue 9._____ Declining-balance method Explanation A.The average proportion of a company's total assets that is long-lived. B.A depreciation method that produces higher amounts of depreciation expense in the early years of an asset's life and lower amounts in the later years. C.The cost of financing an asset. D.Also known as book value. E.Assets that have physical substance. F.The denominator of the fixed asset turnover ratio. G.How expenses are reported in the income statement. H.A depreciation method that spreads asset cost by use rather than time. I.Assets that will be used for more than a year. J.The process of transferring the cost of long-lived tangible assets to expenses. K.When a company writes down the value of an asset when estimated future cash flows fall below the original level estimated. L.The numerator of the fixed asset turnover ratio. M.When costs are recorded as assets rather than expenses. N.When a company writes down the value of an asset because estimated future cash flows fall below the book value.

Vango,Inc.sold its van for $6,000 cash.The van's original cost was $40,000,and its accumulated depreciation was $32,000.When recording the sale,Vango should record a:

On January 1,2016,Baker Co.purchased equipment for $100,000.It has an estimated useful life of five years,and its residual value is $10,000.If it uses the double declining balance method,what is the amount of accumulated depreciation as of December 31,2017?

Goodwill may be attributable to all of the following except:

The units-of-production method provides the closest matching of a long-lived asset's depreciation expense to the revenues generated by using that asset when the:

Which of the following statements is correct when the straight-line method is used to compute depreciation?