Exam 10: Fixed Assets and Intangible Assets

A fixed asset with a cost of $41,000 and accumulated depreciation of $36,000 is traded for a similar asset priced at $50,000. Assuming a trade-in allowance of $4,000, the cost basis of the new asset is

Capital expenditures are costs of acquiring, constructing, adding, or replacing property, plant and equipment.

When land is purchased to construct a new building, the cost of removing any structures on the land should be charged to the building account.

The formula for depreciable cost is

The Weber Company purchased a mining site for $1,750,000 on July 1, 2014. The company expects to mine ore for the next 10 years and anticipates that a total of 400,000 tons will be recovered. The estimated residual value of the property is $150,000. During 2014 the company extracted 6,500 tons of ore. The depletion expense for 2014 is

The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called

A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 is sold for $3,500. What is the amount of the gain or loss on disposal of the fixed asset?

Expected useful life is

The cost of replacing an engine in a truck is an example of ordinary maintenance.

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.

A capital lease is accounted for as if the asset has been purchased.

If a fixed asset with a book value of $10,000 is traded for a similar fixed asset, and a trade-in allowance of $15,000 is granted by the seller, if the transaction is deemed to have commercial substance, the buyer would report a gain on disposal of fixed assets of $5,000.

Which intangible assets are amortized over their useful life?

The cost of a patent with a remaining legal life of 10 years and an estimated useful life of 7 years is amortized over 10 years.

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

On December 31 it was estimated that goodwill of $65,000 was impaired. In addition, a patent with an estimated useful economic life of 10 years was acquired for $60,000 on July 1.

Solare Company acquired mineral rights for $60,000,000. The diamond deposit is estimated at 6,000,000 tons. During the current year, 2,300,000 tons were mined and sold.

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

Land acquired so it can be resold in the future is listed in the balance sheet as a(n)

For each of the following fixed assets, determine the depreciation expense and the book value for the dates requested: Disposal date is N/A if asset is still in use. Method: SL = Straight Line; DDB = Double Declining Balance Assume the estimated life was 5 years for each asset.