Exam 9: Fixed Assets and Intangible Assets

An exchange is said to have commercial substance if future cash flows remain the same as a result of the exchange.

Identify the following as a fixed asset FA,or intangible asset IA,natural resource NR,or none of theseN a. computer b. patent c .oil reserve d. goodwill e. U.S.Treasury note f. land used for employee parking g. gold mine

A building with an appraisal value of $154,000 is made available at an offer price of $172,000.The purchaser acquires the property for $40,000 in cash,a 90-day note payable for $45,000,and a mortgage amounting to $75,000.The cost basis recorded in the buyer's accounting records to recognize this purchase is

Prior to adjustment at the end of the year,the balance in Trucks is $300,900 and the balance in Accumulated Depreciation-Trucks is $88,200.Details of the subsidiary ledger are as follows: Truck No. Cost Estimated Residual Value Estimated Useful Life Accumulated Depreciation at Beginning of Year Miles Operated During Year 1 \ 100,000 \ 13,000 300,000 - 30,000 2 72,900 9,900 300,000 \ 60,000 25,000 3 38,000 3,000 200,000 8,050 45,000 4 90,000 13,000 200,000 20,150 40,000 Required: 1 Based on the units-of-output method,determine the depreciation rates per mile and the amount to be credited to the accumulated depreciation section of each of the subsidiary accounts for the miles operated during the current year. 2 Journalize the entry to record depreciation for the year.

The higher the fixed asset turnover,the

Fixed assets are ordinarily presented on the balance sheet

The Bacon Company acquired new machinery with a price of $15,200 by trading in similar old machinery and paying $12,700.The old machinery originally cost $9,000 and had accumulated depreciation of $5,000.In recording this transaction,Bacon Company should record

Convert each of the following estimates of useful life to a straight-line depreciation rate,stated as a percentage. 1. 2 years 2. 8 years 3. 10 years 4. 20 years 5. 25 years 6. 40 years 7. 50 years

The accumulated depletion of a natural resource is reported on the

The book value of a fixed asset reported on the balance sheet represents its market value on that date.

Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended.

Chasteen Company acquired mineral rights for $9,100,000.The mineral deposit is estimated at 65,000,000 tons.During the current year,18,375,000 tons were mined and sold. Required: 1 Determine the amount of depletion expense for the current year. 2 Journalize the adjusting entry to recognize the depletion expense.

A new machine with a purchase price of $109,000,with transportation costs of $12,000,installation costs of $5,000,and special acquisition fees of $6,000,would have a cost basis of

The acquisition costs of property,plant,and equipment should include all normal,reasonable and necessary costs to get the asset in place and ready for use.

The following information was taken from a recent annual report of Harrison Company in millions: Current Year Preceding Year Land and buildings \ 726 \ 361 Machinery, equipment, and internal-use software 595 470 Office furniture and equipment 94 81 Other fixed assets related to leases 760 569 Accumulated depreciation and amortization 894 644 Required: 1 Compute the book value of the fixed assets for the current year and the preceding year and explain the differences,if any. 2 Would you normally expect the book value of fixed assets to increase or decrease during the year?

The depreciation method that does not use residual value in calculating the first year's depreciation expense is

What is the cost of the land,based upon the following data?

The journal entry for recording payment for the short-term lease of a fixed asset would

Expected useful life is

A machine costing $57,000 with a 6-year life and $54,000 depreciable cost was purchased January 1.Compute the yearly depreciation expense using straight-line depreciation.