Exam 9: Accounting for Long-Lived and Intangible Assets

Oaks Company purchased a tractor at a cost of $180,000 on January 1, 2019. The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years. At the end of two years of service, Oaks reevaluated the tractor's useful life. Management extended the useful life an additional four years, but estimated that the tractor would have no residual value at the end of this time. If the company uses straight-line depreciation, what amount would be recorded as the depreciation expense each year, beginning with the third year?

On June 30, 2019, Milch, Inc. sold some used equipment for $120,000. The equipment had been purchased several years ago for $260,000. Milch, Inc. properly recorded a $28,000 gain on the sale. The accumulated depreciation on the equipment at the date of sale was:

Berning Company purchased a tractor at a cost of $540,000. The tractor has an estimated salvage value of $60,000 and an estimated life of 8 years, or 10,000 hours of operation. The tractor was purchased on January 1, 2019 and was used 2,400 hours in 2019 and 2,100 hours in 2020. On January 1, 2021, the company decided to sell the tractor for $210,000. Berning uses the units-of-production method to account for the depreciation on the tractor. Based on this information, the entry to record the sale of the tractor will show:

Following is a numbered list of assets and the definitions of six assets. Place the number of the appropriate asset in the space to the left of its definition. -The amount paid by one company in the acquisition of another company, above the amount that can be attributed to the identifiable net assets of the acquired company.

Equipment costing $120,000 with a salvage value of $12,000 and an estimated life of 8 years has been depreciated by Davey Company using the straight-line method for 2 years. Assuming a revised estimated total life of 6 years, and no change in the salvage value, determine the depreciation expense for Year 3.

Saul Company purchased a tractor at a cost of $180,000. The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years, or 12,000 hours of operation. The tractor was purchased on January 1, 2019 and was used 2,400 hours in 2019 and 2,200 hours in 2020. What method of depreciation will produce the maximum depreciation expense in 2019?

On January 1, 2019, Ray Roberto, Inc. acquired a new machine for $560,250. Its estimated useful life is nine years with an expected salvage value of $20,250. Assuming straight-line depreciation, 2019 depreciation expense is:

At January 1, 2019, Peter & Sons Company had total assets of $1,400,000 and at December 31, 2019, its total assets were $1,600,000. Peter & Sons' net sales for 2019 were $1,350,000 and its 2019 net income was $120,000. Peter & Sons' asset turnover for 2019 is:

On January 1, 2018, Salt Company purchased equipment for $32,000. Salt uses straight-line depreciation and estimates a five-year useful life and a $2,000 salvage value. On December 31, 2022, the equipment was stolen. Assuming the equipment was not insured against theft, the journal entry to record the theft should reflect:

On January 1, 2019, Upward Company purchased a copy machine. The machine costs $320,000, its estimated useful life is 8 years, and its expected salvage value is $20,000. What is the depreciation expense for 2020 using double-declining-balance method?

Following is a numbered list of assets and the definitions of six assets. Place the number of the appropriate asset in the space to the left of its definition. -An exclusive privilege granted an inventor to exclude others from making, using, or selling the invention.

At January 1, 2019, Crane Company had total assets of $1,800,000 and at December 31, 2019, its total assets were $2,200,000. Crane's net sales for 2019 were $1,700,000 and its 2019 net income was $110,000. Crane's return on assets for 2019 is:

At January 1, 2019, Bakas Company had total assets of $5,400,000 and at December 31, 2019, its total assets were $6,600,000. Markus's net sales for 2019 were $13,650,000 and its 2019 net income was $360,000. Bakas's asset turnover ratio for 2019 is:

Following is a numbered list of assets and the definitions of six assets. Place the number of the appropriate asset in the space to the left of its definition. -An exclusive right to operate or sell a specific brand of products in a given geographical area.

Spencer Company purchased a tractor at a cost of $360,000 on January 1, 2019. The tractor has an estimated salvage value of $60,000 and an estimated life of 8 years. If Spencer uses the straight-line method, what is the book value at January 1, 2023?

On January 1, 2017, Alexis Company purchased a delivery truck for $60,000. They estimated the useful life of the truck to be 6 years, and the salvage value to be $12,000. On July 1, 2022, they sold the truck for a loss of $1,200. Assuming the company uses straight line depreciation, calculate the selling price of the truck.

On January 1, 2019, WV Hills Company purchased for $180,000 a new machine that has an estimated useful life of eight years (or 500,000 stamping operations), after which the expected salvage value is $7,200. Under each of the following depreciation methods, calculate the depreciation expense for 2020. Required: a. Straight-line depreciation b. Double-declining balance depreciation c. Units-of-production depreciation, if 70,000 stamping operations were made in 2020

On January 1, 2019, Philadelphia Instruments sold a depreciable asset for cash of $1,200,000 and recognized a gain of $180,000. The asset had been purchased on January 1, 2014 with an estimated useful life of 10 years, and no salvage value. The asset was depreciated using the straight-line method. What must have been the original cost of the asset?

Mule Company has a machine that originally cost $90,000. Depreciation has been recorded for three years using the straight-line method, with a $10,000 estimated salvage value at the end of an expected ten-year useful life. After recording depreciation at the end of the third year, Horseshoe disposes of the machine. For each of the following independent disposals of the machine, place the dollar amount of the recognized gain or loss in the appropriate column. If there is no recognized gain or loss, place a zero in each column.

Caesar Company bought a machine on January 1, 2019. 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. Using straight line depreciation, the book value of the machine at the beginning of the third year would be: