Exam 7: Fixed Assets and Intangible Assets

Accelerated depreciation is primarily used for

Companies usually compute depletion by using the double-declining-balance method.

A fully depreciated asset must be

Book value is defined as

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

Equipment was purchased for $18,000.It has a useful life of 5 years and a residual value of $2,000.What is depreciation expense for year one under the double-declining-balance method?

Which of the following is NOT a fixed asset?

The accounting term depreciation measures

What type of depreciation occurs when an asset can no longer provide services at the level originally intended?

All amounts paid to get an asset in place and ready for use are referred to as

For each of the following items indicate whether the transactions listed below increased (+),decreased (-)or had no effect (o)by inserting the appropriate symbol.

Which intangible assets are amortized over their useful life?

The straight-line method is appropriate if usage of the asset varies considerably from year to year.

A company acquired some land for $80,000 to construct a new office complex.Legal fees paid were $2,300,delinquent taxes assumed were $3,400,and $5,850 was paid to remove an old building from which salvaged materials sold for $1,950.What is the cost basis for the land?

Cook Co.incurred the following costs related to the office building used in operating its sports supply company: Classify each of the costs as a capital expenditure or a revenue expenditure.For those costs identified as capital expenditures,classify each as an additional or replacement component.

Fixed assets may be shown at book value on the balance sheet.

You are examining the financial statements of a company.You observe patent amortization expense of $1.5 million and a loss on impairment of goodwill for $25 million.

Depreciation on a yearly basis differs between the double-declining-balance method and the straight-line method.However,total depreciation across the years of an asset's life is the same under the double-declining-balance method or the straight-line method.

Which of the following is NOT characteristic of the accumulated depreciation account?

A company purchased an oil well for $25 million with a residual value of $500,000.It is estimated that 10 million barrels can be extracted from the well.Determine depletion expense assuming 3 million barrels are extracted and sold.