Exam 10: Fixed Assets and Intangible Assets

Costs associated with normal research and development activities should be treated as intangible assets.

Assets may be grouped according to common traits and depreciated by using a single composite rate.

A machine costing $57,000 with a 6-year life and $54,000 depreciable cost was purchased January 1, 2015. Compute the yearly depreciation expense using straight-line depreciation.

The transfer to expense of the cost of intangible assets attributed to the passage of time or decline in usefulness is called amortization.

The amount of the depreciation expense for the second full year of use of a fixed asset costing $100,000, with an estimated residual value of $5,000 and a useful life of 4 years, is $25,000 by the declining-balance method at twice the straight-line rate.

When minor errors occur in the estimates used in the determination of depreciation, the amounts recorded for depreciation expense in the past should be corrected.

Machinery acquired at a cost of $80,000 and on which there is accumulated depreciation of $55,000 (including depreciation for the current year to date) is exchanged for similar machinery. For financial reporting purposes, present entries to record the disposition of the old machinery and the acquisition of new machinery under each of the following assumptions:

The exclusive right to use a certain name or symbol is called a

Which of the following is included in the cost of constructing a building?

A capital expenditure results in a debit to

When a major corporation develops its own trademark and over time it becomes very valuable, the trademark may be shown on their balance sheet due to lack of a material cost.

When a seller allows a buyer an amount for old equipment that is traded in for new equipment of similar use, this amount is known as boot.

The accumulated depletion account is

An intangible asset is one that has a physical existence.

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

When a company replaces a component of property, plant and equipment, which statement below does not account for one of the steps in the process?

Residual value is also known as all of the following except

A double-declining balance rate for calculating depreciation expense is determined by doubling the straight-line rate. Assuming that an asset has a useful life of 25 years, determine the rate to be used if using the double-declining balance method.

Equipment acquired at a cost of $126,000 has a book value of $42,000. Journalize the disposal of the equipment under the following independent assumptions. Journal

The formula for depreciable cost is