Exam 9: Fixed Assets and Intangible Assets

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

On June 1,2014,Aaron Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years and 30,000 hours. Using straight line depreciation,calculate depreciation expense for the last year.

The double-declining-balance method is an accelerated depreciation method.

Comment on the validity of the following statements."As an asset loses its ability to provide services,cash needs to be set aside to replace it.Depreciation accomplishes this goal."

It is necessary for a company to use the same depreciation method for all of its depreciable assets.

On December 31,Strike Company has decided to discard one of its batting cages.The initial cost of the equipment was $310,000 with an accumulated depreciation of $260,000.Depreciation has been taken up to the end of the year.The following will be included in the entry to record the disposal.

Expenditures for research and development are generally recorded as

Both the initial cost of the asset and the accumulated depreciation will be taken off the books with the disposal of the asset.

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.

Long-lived assets that are intangible in nature,used in the operations of the business,and not held for sale in the ordinary course of business are called fixed assets.

Computer equipment was acquired at the beginning of the year at a cost of $57,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years.Determine the 2nd year's depreciation using straight-line depreciation.

Financial Statement data for the years ended December 31 for Parker Corporation is as follows: 2012 2011 Net Sales $2,595,600 $2,409,498 Fixed Assets: Beginning of the year $ 901,070 $820,000 End of the year 829,330 901,070 a)Determine the Fixed Asset Turnover for 2012 and 2011. b)Does the change in Fixed Asset Turnover from 2011 to 2012 indicate a favorable or unfavorable trend.?

During construction of a building,the cost of interest on a construction loan should be charged to an expense account.

The cost of computer equipment does not include the consultant's fee to supervise installation of the equipment.