Exam 10: Fixed Assets and Intangible Assets

The acquisition costs of property, plant, and equipment should include all normal, reasonable and necessary costs to get the asset in place and ready for use.

Journalize each of the following transactions:

When old equipment is traded in for a new equipment, the difference between the list price and the trade in allowance is called boot.

All of the following below are needed for the calculation of straight-line depreciation except

The amount of depreciation expense for the first full year of use of a fixed asset costing $95,000, with an estimated residual value of $5,000 and a useful life of 5 years, is $19,000 by the straight-line method.

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 $50,000. What is the amount of the gain or loss on this transaction?

Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two categories

Residual value is incorporated in the initial calculations for double-declining-balance depreciation.

On April 15, Compton Co. paid $2,800 to upgrade a delivery truck and $125 for an oil change. Journalize the entries for the upgrade to delivery truck and oil change expenditures.

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