Exam 9: Fixed Assets and Intangible Assets

Xtra Company purchased goodwill from Argus for $144,000. Argus had developed the goodwill over 6 years. How much would Xtra amortize the goodwill for its first year?

A machine costing $57,000 with a 6-year life and $3,000 residual value was purchased January 2, 2011. Compute the yearly depreciation expense using straight-line depreciation.

As a company records depreciation expense for a period of time a corresponding cash inflow from investing activities is reported on the statement of cash flows.

The depreciable cost of a building is the same as its acquisition cost.

All property, plant, and equipment assets are depreciated over time.

To a major resort, timeshare properties would be classified as property, plant and equipment.

Journalize each of the following transactions: (a)A wing costing $\$ 1,250,000$ was added to the building A new motgage was issued for the cost. (b)Equipment was upgrade d to increase it capacity to produce widgets. The upgrade cost of $\$ 13,000$ was paid in cash (c)A major overhaul costing $\$ 7,000$ on a machine increased the useful life by 2 years. The payment was made in cash

An estimate of the amount which an asset can be sold at the end of its useful life is called residual value.

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

Williams Company acquired machinery on July 1, 2009, at a cost of $130,000. The estimated useful life of the machinery was 10 years and the estimated residual value was $10,000. Williams uses the double-declining-balance method of depreciation. On October 1, 2012, Williams sold the equipment for $75,000. 1) Record the journal entry for the depreciation on this machinery for 2012. 2) Record the journal entry for the sale of the machinery.

Machinery was purchased on January 1, 2010 for $51,000. The machinery has an estimated life of 7 years and an estimated salvage value of $9,000. Double-declining balance depreciation for 2011 would be

The difference between the balance in a fixed asset account and its related accumulated depreciation account is the asset's book value.

The method used to calculate the depletion of a natural resource is the straight line method.

Determine the depreciation, for the year of acquisition and for the following year, of a fixed asset acquired on October 1 for $500,000, with an estimated life of 5 years, and residual value of $50,000, using (a) the declining-balance method at twice the straight-line rate and (b) the straight-line method. Assume a fiscal year ending December 31.

The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is

A machine with a cost of $80,000 has an estimated residual value of $5,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

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

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

A capitalized asset will appear on the balance sheet as a long term asset.

When a company sells machinery at a price equal to its book value, this transaction would be recorded with an entry that would include the following: