Exam 10: Long-Lived Tangible and Intangible Assets

Dickinson Company owns a delivery truck that costs $108,000, has an estimated salvage value of $8,000, and will provide 200,000 miles of use before retirement.If the truck operates 24,000 miles in a given year, the straight-line (use) depreciation charge is

Firms with tangible long-term assets and less predictable cash flows, such as auto manufacturers and steel companies, whose sales vary with changes in economic conditions, tend to use

U.S.GAAP and IFRS distinguish three categories of long-lived assets for purposes of measuring and recognizing impairment losses.The second category addresses intangibles, other than goodwill, not subject to amortization. This category does not include:

Warrior Dash Express Inc.owns a moving van that originally cost $500,000 and currently has $450,000 of accumulated depreciation.The fair value of the moving van is $120,000.Warrior Dash Express Inc.exchanges the van plus $480,000 in cash for a new moving van costing $600,000. The entry to record the transaction is as follows:

In calculating depreciation and amortization for tangible assets, physical factors that limit service lives include all of the following except:

(CMA adapted, Jun 90 #27) When a fixed plant asset with a five-year estimated useful life is sold during the second year, how would the use of a double declining balance method of depreciation instead of the straight-line method affect the gain or loss on the sale of the fixed plant asset? Gain Loss

First Third Company depreciates an asset with a cost of $55,000 over 10 years using the straight-line method of depreciation and the yearly depreciation expense is $4,000, what is the estimated salvage value of the asset?

When calculating the depreciation or amortization of long-lived assets management must

The entry to record patent amortization of $4,500 embedded in a product is as follows:

Wheaton Company Wheaton Company owns an apartment building that originally cost $40 million and by the end of the current period has accumulated depreciation of $10 million, with net carrying value of $30 million.Wheaton Company had originally expected to collect rentals of $3.34 million each year for 30 years before selling the building for $16 million.Unanticipated placement of a new shopping center has caused Wheaton Company to reassess the future rentals.Wheaton Company expects the building to provide rentals for only 15 more years before Wheaton will sell it.Wheaton Company uses a discount rate of 8% per year in discounting expected rentals from the building. Wheaton now expects to receive annual rentals of $1,200,000 per year for 15 years and to sell the building for $6.0 million after 15 years; these payments, in total, have a present value of $12.2 million when discounted at 8% per year.The building's fair value is $11.0 million today and costs to sell are $600,000. Applying IFRS, Wheaton would record the following entry

Montana Company reports its net assets at a book value of $150,000.Recent investigation revealed that the net assets had a market value of $175,000.In addition, Montana had been offered $220,000 for the net assets by a company named Supply.Com.What is the amount of goodwill that should be recorded by Montana Co.?

Eaton Company has some assets that provide more and better services in the early years of their lives and require increasing amounts of maintenance as they grow older.The _____ method(s), which recognize larger depreciation charges in early years and smaller depreciation charges in later years, can be justified.

Which of the following is not true about goodwill?

Which of the following is/are not true regarding maintenance?

IFRS permits upward asset revaluations, the recognition of unrealized increases in the fair value of long-lived assets under certain conditions.

U.S.GAAP or IFRS require firms to test

When a firm constructs its own buildings or equipment:

Flagler Corporation replaces a roof damaged in a hurricane.The new roof is purposefully designed to be stronger than the old one so that it will support the air conditioning equipment the firm plans to install. Which of the following is/are true?

Long-lived assets with an indefinite life include:

In calculating depreciation and amortization for tangible assets, functional factors that limit service lives include: