Exam 10: Long -Term Assets

Agnes purchased a computer for $2,240.It has an estimated useful life of four years and an estimated residual value of $240.The entry to record the depreciation charge for the first year using the double-declining-balance method is:

A capital expenditure results in a debit to a(n)

Obsolescence is not a reason for an asset's limited useful life.

Small expenditures for what ordinarily are considered capital expenditures frequently are treated as revenue expenditures.

Which of the following is not a characteristic of all long-term assets?

If the purchase of machinery is treated incorrectly as a revenue expenditure,what will be the effect on net income and total assets in the year of purchase and in the following year,and why?

The exclusive right to sell a product within a certain geographic area is called a

Customer lists are classified as intangible assets.

In general,a cost incurred in conjunction with a long-term asset is included in the long-term asset account when the cost

When discarding equipment,depreciation need not by updated.

Fair value is the amount for which an asset could be bought or sold in a current transaction.

An asset was purchased for $100,000.It had an estimated residual value of $20,000 and an estimated useful life of ten years.After four years of use,the estimated residual value is revised to $14,000.Assuming straight-line depreciation,depreciation expense in year 5 of use would be

Intangible assets are also called wasting assets.

In 2014,Barnes Enterprises purchased an oil well for $12,000,000.It is estimated that 80,000,000 barrels can be extracted from the well.Depletion expense during 2015,when 2,000,000 barrels were extracted and sold,totaled

Which of the following would not be debited to the Machinery account?

An expenditure to lengthen the useful life of a company vehicle would require a

The costs associated with the development of software,for sale or internal use,should be expensed in the period incurred.

A graph depicting yearly depreciation expense under the production method will contain a line that

The entry to record the sale of equipment costing $40,000,with accumulated depreciation of $34,000 and sale price of $7,700,will include

Free cash flow is a good measure of a company's ability to finance long-term assets.