Exam 9: Accounting for Long-Lived and Intangible Assets

Pokagon Store's 2019 financial statements show earnings before interest of $3,273 million, net income of $210 million, sales of $235,226 million, and average total assets of $65,025 million. How much is Pokagon Store's asset turnover for the year?

Durham Company purchased a new van for floral deliveries on January 1, 2019. The van cost $84,000 with an estimated life of 5 years and $10,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the balance of the Accumulated Depreciation account at the end of 2020?

At January 1, 2019, Bragg Company had total assets of $1,800,000 and at December 31, 2019, its total assets were $2,200,000. Bragg's net sales for 2019 were $3,700,000 and its 2019 net income was $110,000. Bragg's asset turnover ratio for 2019 is:

Nair Company purchased land and a building for a total price of $15,600,000. Individually, the land was appraised at $2,520,000 and the building at $14,280,000. How much should be recorded as the acquisition cost of each asset?

For $11,100,000, Neptune, Inc. purchased another company's land, building, and equipment. Independent appraisals indicate the values of these assets as follows: land, $1,830,000; building, $7,320,000; and equipment, $3,050,000. How much should be recorded as the acquisition cost of each asset?

On January 1, 2019, Chace Instruments sold a depreciable asset for cash of $400,000 and recognized a gain of $60,000. 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?

On January 1, 2018, Lumos Company purchased a machine for $70,200. Lumos uses straight-line depreciation and estimates an eight-year useful life and an $5,400 salvage value. On December 31, 2021, Lumos sells the machine for $42,000. In recording this sale, Lumos should reflect:

Raas, Inc. purchased a truck on January 1, 2019, for $144,000. At that time, the truck's useful life was an estimated four years with no salvage value. Before the entry to record 2022 depreciation was made, the truck's estimated useful life was changed to six years with a $2,700 salvage value. Using straight-line deprecation, what is the 2022 depreciation expense?

A land site for a new office building is purchased for $360,000 by Texas Coast Company. A barn on the site will be razed at a net cost of $34,000. The $34,000 razing expenditure is properly debited to:

Gold Stat Company purchased a machine on January 1, 2019 for $120,000, with a 5-year life, and a $12,000 residual life. If the company uses the double-declining balance method of depreciation, compute the depreciation expense for the year ended December 31, 2023.

For $33,300,000, Saturn, Inc. purchased another company's land, building, and equipment. Independent appraisals indicate the values of these assets as follows: land, $3,660,000; building, $23,790,000; and equipment, $9,150,000. How much should be recorded as the acquisition cost of each asset?

Oval Company acquired a machine that involved the following expenditures and related factors: The initial accounting cost of the machine should be:

On January 1, 2019, Ray, Inc. acquired a new machine for $186,750. Its estimated useful life is nine years with an expected salvage value of $6,750. Assuming straight-line depreciation, 2019 depreciation expense is:

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 amount will Saul Company report as depreciation expense over the 8-year life of the equipment using straight-line depreciation?

Paden City Company purchased a new van for floral deliveries on January 1, 2019. The van cost $108,000 with an estimated life of 5 years and $12,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the balance of the Accumulated Depreciation account at the end of 2020?

Hubert Company purchased a property (including land and building). The company acquired the property in exchange for a 15-year mortgage for $1,800,000. Their insurance company appraised the components as follows: What should be the cost basis for the building?

A truck that cost Starch Company $36,000, was estimated to have a salvage value of $8,000, and was expected to last 10 years. At the end of 5 years of use (assume straight line depreciation), it was sold for $30,000, the journal entry to record the sale will involve a:

Custom Fabrication Company has a machine that originally cost $201,000. Depreciation has been recorded for seven years using the straight-line method, with a $9,000 estimated salvage value at the end of an expected eight-year useful life. After recording depreciation at the end of the seventh year, Custom Fabrication 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.

At January 1, 2019, Flamingo Company had total assets of $5,400,000 and at December 31, 2019, its total assets were $6,600,000. Flamingo's net sales for 2019 were $5,100,000 and its 2019 net income was $420,000. Flamingo's return on assets for 2019 is:

Swift Corporation purchased a depreciable asset for $1,170,000 on January 1, 2018. The estimated salvage value is $90,000, and the estimated useful life is 9 years. The straight-line method is used for depreciation. On January 1, 2021, Swift changed its estimates to a total remaining useful life of 8 years with a salvage value of $150,000. What is 2021 depreciation expense?