Exam 9: Accounting for Long-Lived and Intangible Assets

Golden Dollar Company purchased a machine on January 1, 2019 for $360,000, with a 5-year life, and a $36,000 residual life. If Compute the book value of the machine on December 31, 2021 if the company uses the double-declining balance method of depreciation.

Fantasyland Company purchased equipment with a cost of $190,000, with an estimated residual value of $10,000, and an estimated life of 15 years. After 5 full years of recording depreciation by the straight-line method, it was determined that due to obsolescence, the equipment's useful life should be reduced by 5 years and the residual value changed to zero. The depreciation expense for Year 6 is:

On January 1, 2017, Twinkle, Inc. purchased a machine for $160,000. Twinkle uses straight-line depreciation and estimates a seven-year useful life and a $6,000 salvage value. On December 31, 2023, Twinkle cannot locate a buyer for the used machine so it is scrapped. In recording the machine retirement, Twinkle should reflect:

On January 1, 2019, Mango Company purchased a new truck for $88,200. Its estimated useful life is seven years or 200,000 miles. The truck's expected salvage value is $4,200. During 2019, the truck was driven 20,000 miles. Assuming units-of-production depreciation, 2019 depreciation expense is:

Minerva Company purchased land and a building for a total price of $5,200,000. Individually, the land was appraised at $840,000 and the building at $4,760,000. How much should be recorded as the acquisition cost of each asset?

Henry Company purchased a property (including land and building). The company acquired the property in exchange for a 15-year mortgage for $5,400,000. Their insurance company appraised the components as follows: What should be the cost basis for the building?

On January 1, 2018, Beast Company acquired equipment for $360,000. The estimated life of the equipment is 5 years or 20,000 hours. The estimated residual value is $60,000. What is the amount of depreciation expense for 2020, if the company uses the double-declining-balance method of depreciation?

Apple Company bought a machine on January 1, 2019. The machine cost $432,000 and had an expected salvage value of $72,000. 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:

On April 1, 2019, Lake Co. purchased machinery for $240,000. Salvage value was estimated to be $10,000. The machinery will be depreciated over ten years using the double-declining balance method. If depreciation is computed on the basis of the nearest full month, determine the depreciation expense for the period January 1 thru December 31, 2020 on this machinery.

Natalie Company purchased a tractor at a cost of $540,000 on January 1, 2019. The tractor has an estimated salvage value of $60,000 and an estimated life of 8 years. At the end of two years of service, Natalie 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?

Rite Company purchased a machine on January 1, 2018 for $72,000. The company estimates that the machine will have a $6,000 salvage value at the end of its 10 year useful life. On September 30, 2022 the machine was sold for a gain of $5,250. What must have been the selling price of the machine?

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

Gold Star Company purchased a machine on January 1, 2019 for $120,000, with a 5-year life, and a $12,000 residual life. Compute the book value of the machine on December 31, 2021 if the company uses the double-declining balance method of depreciation.

On January 1, 2019, Camire, Inc. purchased a new machine for $160,000. Its estimated useful life is eight years with an expected salvage value of $12,000. Assuming double-declining balance depreciation, 2019 depreciation expense is:

Grove Company's 2019 asset turnover was 3.0. The firm's total assets were $8,750,000 at January 1, 2019 and $9,300,000 at December 31, 2019. Net sales for 2019 were:

On January 1, 2018, Fireside Company purchased equipment for $172,000. Fireside uses straight-line depreciation and estimates an eight-year useful life and a $12,000 salvage value. On December 31, 2022, Fireside sells the equipment for $60,000. In recording this sale, Fireside should reflect:

On January 1, 2019, Hobbes, Inc. purchased a new machine for $576,000. Its estimated useful life is 10 years with an expected salvage value of $96,000. Assuming double-declining balance depreciation, 2019 depreciation expense is:

Taffy Company made a package purchase of three pieces of machinery for $144,000. The fair market values of the machinery were determined to be as follows: What cost should Taffy Company record for Machine C?

On January 1, 2019, Seek Company purchased a copy machine. The machine costs $960,000, its estimated useful life is 8 years, and its expected salvage value is $60,000. What is the depreciation expense for 2020 using double-declining-balance method?

On January 1, 2017, Airedale Company purchased new equipment for $1,125,000. The equipment had an estimated $90,000 salvage value at the end of its estimated ten-year useful life. Straight-line depreciation has been recorded. Before adjusting the accounts for 2022, Airedale Company reduces the useful life of the equipment by one year and decreases the salvage value to $67,500. Required: a. Calculate the 2022 depreciation expense. b. What is the equipment's book value at the end of 2022 after recording the 2022 depreciation expense?