Exam 12: Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Ballyhigh Company purchased equipment for $20,000.Sales tax on the purchase was $1,500.Other costs incurred were freight charges of $400,repairs of $350 for damage during installation,and installation costs of $450.What is the capitalizable cost of the equipment?

Which of the following is not a major characteristic of a fixed asset?

In the context of constructing a plant asset,the interest that the company would not have paid if it had not borrowed funds to construct the asset is referred to as ________.

Under what circumstances does derecognition of an asset occur?

The half-year convention is not applicable for the double-declining balance method of determining depreciation expense.

U.S.GAAP allows a firm to record a half year of depreciation expense for any asset acquired at any time during the year.

Presented below are the components related to an office building that Lorny Manufacturing Company purchased for $10,000,000 in January,2017. a.Compute depreciation expense for 2017,assuming that Lorny uses component depreciation,uses the straight-line method of depreciation,and ignores scrap values. b.Assume that the building engineering was replaced after 20 years at a cost of $2,500,000.Prepare the journal entry to record the replacement of the old component with the new component.

Which of the following is not a required disclosure for property,plant,and equipment?

What are IFRS disclosure requirements for intangible assets?

An improvement made to a machine increased its fair value and its production capacity.The cost of the improvement should be debited to ________.

For income statement purposes,when is depreciation expense considered to be a variable expense?

A copyright is an exclusive right to reproduce and sell an original work for the creator's life plus 20 years.

Average age of a company's long-term operating assets is computed as ________.

Seeder Inc.made a lump-sum purchase of three pieces of machinery for $130,000 from an unaffiliated company.At the time of acquisition,Seeder paid $5,000 to determine the appraised value of the machinery.The appraisal disclosed the following values: What cost should be assigned to Machines A,B,and C,respectively?

Construction costs for fences and driveways are reported on the statement of financial position as ________.

Scrap value reduces the depreciable base of an asset.