Exam 8: Reporting and Analyzing Long-Term Assets

During the current year,a company acquired a new computer with a cash price of $12,800 by exchanging an old one on which the company received a $1,500 trade-in allowance (with the balance of $11,300 paid in cash).The old computer cost $9,000 and its accumulated depreciation was $5,500 as of the exchange date.Prepare the journal entry to record the exchange.

A company had average total assets of $897,000.Its gross sales were $1,090,000 and its net sales were $1,000,000.The company's total asset turnover is equal to:

Mason Company sold a piece of equipment for $25,000 cash on December 31 after recording the annual depreciation on the asset.The equipment had an original cost of $92,500 and accumulated depreciation of $60,000.Prepare the general journal entry to record the sale of this asset.

Accumulated depreciation represents funds set aside to buy new assets when the assets currently owned are replaced.

The Weiss Company purchased a truck for $95,000 on January 2,2008.The truck was estimated to have a $3,000 salvage value and a 4-year life.The truck was depreciated using the straight-line method.During 2010,it was obvious that the truck's total useful life would be 6 years rather than 4 and the salvage at the end of the 6th year would be $1,500.Determine the depreciation expense for the truck for the 6 years of its life. Year Depreciation expense 2008 2009 2010 2011 2012 2013

Compare the different depreciation methods (straight-line,units-of-production and double-declining-balance)with respect to the computation of depreciation per period and the total depreciation over the life of the asset.

A company purchased a machine for $970,000.The machine has a useful life of 12 years and a residual value of $4,500.It is estimated that the machine could produce 1,000,000 units over its useful life.In the first year,200,000 units were produced.In the second year,production increased to 300,000 units.Using the units-of-production method,what is the book value of this asset at the end of the second year of operations?

Huffington Company traded in an old delivery truck for a new one.The old truck had a cost of $75,000 and accumulated depreciation of $60,000.The new truck had an invoice price of $125,000.Huffington was given a $12,000 trade-in allowance on the old truck,which meant they paid $113,000 in addition to the old truck to acquire the new truck.What is the recorded value of the new truck?

When an asset is purchased (or disposed of)at any time other than the beginning or the end of an accounting period,depreciation is recorded for part of a year so that the year of purchase or the year of disposal is charged with its share of the asset's depreciation.

A company used straight-line depreciation for an item of equipment that cost $12,000,had a salvage value of $2,000 and had a five-year useful life.After depreciating the asset for three complete years,the salvage value was reduced to $1,200 and its total useful life was increased from 5 years to 6 years.Determine the amount of depreciation to be charged against the machine during each of the remaining years of its useful life:

A company purchased mining property containing 7,350,000 tons of ore for $1,837,500.In 2009 it mined and sold 857,000 tons of ore and in 2010 it mined and sold 943,000 tons of ore.Calculate the depletion expense for 2009 and 2010.What was the book value of the property at the end of 2010?

Depletion:

Intangible assets are certain nonphysical assets used in operations that confer on their owners long-term rights,privileges or competitive advantage.

Revising an estimate of the useful life or salvage value of a plant asset is referred to as a change in accounting estimate and is reflected in the past,current and future financial statements.

A company purchased a machine on January 1 of the current year for $750,000.Calculate the annual depreciation expense for each year of the machine's life (estimated at 5 years or 20,000 hours,with a salvage value of $75,000).During the machine's 5-year life its hourly usage was: 3,000; 4,000; 5,000; 5,000; and 3,000 hours. Year Straight-Line Units-of- Production Double- Declining- Balance Year 1 \ \ \ Year 2 Year 3 Year 4 Year 5 Totals

Most companies use accelerated depreciation for tax purposes as it reduces taxable income due to higher depreciation expense in the early years of an asset's life.

A company purchased equipment valued at $200,000 on January 1.The equipment has an estimated useful life of six years or five million units.The equipment is estimated to have a salvage value of $13,400.Assuming the double declining balance method of depreciation,what is the annual depreciation for the second year if 1.5 million units were produced?

A depreciable asset currently has a $24,500 book value.The company owning the asset uses straight-line depreciation.They paid $37,000 for this asset and consider it to have a $2,000 salvage value with a seven year useful life.How long has the company owned this asset?

____________________ refers to a plant asset that is no longer useful in producing goods or services with a competitive advantage because of new inventions and improvements.

A company sold for $40,000 cash a machine that originally cost $90,000.The accumulated depreciation on this machine was $47,000 at the time of the sale.What was the company's gain or loss on this sale?