Exam 10: Fixed Assets and Intangible Assets

When selling a piece of equipment for cash, a loss will result when the proceeds of the sale are less than the book value of the asset.

For income tax purposes most companies use an accelerated deprecation method called double declining balance.

An exchange is said to have commercial substance if future cash flows remain the same as a result of the exchange.

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

On July 1st, Harding Construction purchases a bulldozer for $228,000. The equipment has a 8 year life with a residual value of $16,000. Harding uses straight-line depreciation. (a) Calculate the depreciation expense and provide the journal entry for the first year ending December 31st. (b) Calculate the third year's depreciation expense and provide the journal entry for the third year ending December 31st. (c) Calculate the last year's depreciation expense and provide the journal entry for the last year. Annual depreciation is:

A machine with a cost of $120,000 has an estimated residual value of $15,000 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?

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.

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

The cost of new equipment is called a revenue expenditure because it will help generate revenues in the future.

Computer equipment was acquired at the beginning of the year at a cost of $63,000 that has an estimated residual value of $3,000 and an estimated useful life of 5 years. Determine the (a) depreciable cost (b) double-declining-balance rate, and (c) double-declining-balance depreciation for the first year.

On December 31, Strike Company has decided to sell 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 company found a company that is willing to buy the equipment for $20,000. What is the amount of the gain or loss on this transaction?

Macon Co. acquired drilling rights for $7,500,000. The oil deposit is estimated at 37,500,000 gallons. During the current year, 3,000,000 gallons were drilled. Journalize the adjusting entry at December 31, 2011 to recognize the depletion expense. Journal

Patents are exclusive rights to manufacture, use, or sell a particular product or process.

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

A machine costing $85,000 with a 5-year life and $5,000 residual value was purchased January 2, 2011. Compute depreciation for each of the five years, using the declining-balance method at twice the straight-line rate.

A copy machine acquired on March 1, 2011 with a cost of $1,410 has an estimated useful life of 3 years. Assuming that it will have a residual value of $150, determine the depreciation for the first and second year by the straight-line method. Straight-line depreciation = (cost-estimated residual value)/ estimated life Straight-line depreciation = ($1,410 - $150)/3 Straight-line depreciation = $420 per year

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."

A copy machine acquired on March 1, 2011 with a cost of $705 has an estimated useful life of 4 years. Assuming that it will have a residual value of $125, determine the depreciation for the first year by the double-declining-balance method. First year depreciation = $293.75 [$352.50 x (10 /12)]

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 held for sale are classified as fixed assets.