Exam 9: Fixed Assets and Intangible Assets

On July 1,Andrew Company purchased equipment at a cost of $150,000 that has a depreciable cost of $120,000 and an estimated useful life of 3 years or 60,000 hours. Using straight-line depreciation,prepare the journal entry to record depreciation expense for a the first year,b the second year,and c the last year.

An intangible asset is one that has a physical existence.

The cost of replacing an engine in a truck is an example of ordinary maintenance.

Copy equipment was acquired at the beginning of the year at a cost of $72,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years.It is estimated that the machine will output an estimated 1,000,000 copies.This year,315,000 copies were made.Determine the a depreciable cost,b depreciation rate,and c the units-of-output depreciation for the year.

Journalize each of the following transactions: a A wing costing $2,345,000 was added to the building.A new mortgage was issued for the cost. b Equipment was upgraded to increase its capacity to produce widgets.The upgrade cost of $11,500 was paid in cash. c A major overhaul costing $8,000 on a machine increased the useful life by 4 years.The payment was made in cash.

During construction of a building,the cost of interest on a construction loan should be charged to an expense account.

An asset was purchased for $120,000 on January 1,Year 1 and originally estimated to have a useful life of 10 years with a residual value of $10,000.At the beginning of the third year,it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,000.Calculate the third-year depreciation expense using the revised amounts and straight-line method.

Which of the following below is an example of a capital expenditure?

On July 1,Sterns Co.acquired patent rights for $36,000.The patent has a useful life of 6 years and a legal life of 15 years.Journalize the adjusting entry on December 31 to recognize the amortization. Date Description Post. Ref. Debit Credit

Which of the following should be included in the acquisition cost of a piece of equipment?

Machinery was purchased on January 1 for $51,000.The machinery has an estimated life of 7 years and an estimated salvage value of $9,000.Double-declining-balance depreciation for the second year would be round calculations to the nearest dollar:

A gain can be realized when a fixed asset is discarded.

A fixed asset's estimated value at the time it is to be retired from service is called

When the amount of use of a fixed asset varies from year to year,the method of determining depreciation expense that best matches allocation of cost with revenue is

When selling a piece of equipment for cash,a loss will result when the proceeds of the sale are less than the book value of the asset.

A machine with a cost of $75,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours.What is the amount of depreciation for the second full year,using the double-declining-balance method?

Comment on the validity of the following statements."As an asset loses its ability to provide services,cash needs to be set aside to replace it.Depreciation accomplishes this goal."

The formula for depreciable cost is

Champion Company purchased and installed carpet in its new general offices on March 31 for a total cost of $18,000.The carpet is estimated to have a 15-year useful life and no residual value. a.Prepare the journal entries necessary for recording the purchase of the new carpet. b.Record the December 31 adjusting entry for the partial-year depreciation expense for the carpet assuming that Champion Company uses the straight-line method.

Expenditures for research and development are generally recorded as