Question 1

Classify each of the following costs associated with long-lived assets as one of the following:
-Sales taxes paid on new factory equipment

Accepted Answer

A) Buildings 
B) Machinery and equipment 
C) Land 
D) Land improvements

Question 2

Match each account name to the financial statement section a-i) in which it would appear.
-Loss from Impaired Goodwill

Accepted Answer

A) Current Assets 
B) Fixed Assets 
C) Intangible Assets 
D) Current Liability 
E) Long-Term Liability
F)Owners' Equity
G)Revenues
H)Operating Expenses
I)Other Income/Expense

Question 3

When a company exchanges machinery and receives a trade-in allowance less than the book value, this transaction would be recorded with which of the following entry?

Accepted Answer

A)  debit Cash and Machinery; credit Accumulated Depreciation and Machinery 
B)  debit Machinery, Accumulated Depreciation, and Loss on Exchange of Machinery; credit Machinery and Cash 
C)  debit Cash and Machinery; credit Accumulated Depreciation 
D)  debit Machinery and Accumulated Depreciation; credit Machinery and Cash

Question 4

An asset was purchased for $58,000 and originally estimated to have a useful life of 10 years with a residual value of $3,000. After two years of straight-line depreciation, it was determined that the remaining useful life of the asset was only 2 years with a residual value of $2,000.
a) Determine the amount of the annual depreciation for the first two years.
b) Determine the book value at the end of Year 2.
c) Determine the depreciation expense for each of the remaining years after revision.

Accepted Answer

The answer of An asset was purchased for $58,000 and...

Question 5

A machine costing $57,000 with a 6-year life and $54,000 depreciable cost was purchased January 1. Compute the yearly depreciation expense using straight-line depreciation.

Accepted Answer

The answer of A machine costing $57,000 with a 6-year...

Question 6

Machinery was purchased on January 1 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 the second year would be round calculations to the nearest dollar):

Accepted Answer

A)  $6,000 
B)  $10,500 
C)  $10,929 
D)  $10,408

Question 7

If a fixed asset, such as a computer, were purchased on January 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is

Accepted Answer

A)  Accumulated Depreciation Depreciation Expense
1,200
1,200 
B)  Depreciation Expense Accumulated Depreciation
1,200
1,200 
C)  Accumulated Depreciation Depreciation Expense
100
100 
D)  Depreciation Expense Accumulated Depreciation
100
100

Question 8

Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of 5 years, or 14,000 operating hours, and a residual value of $10,000. Compute the depreciation for the first and second years of use by each of the following methods:
a) straight-line
b) units-of-output 1,200 hours first year; 2,250 hours second year)c) double-declining-balance

Accepted Answer

The answer of Equipment purchased at the beginning of the...

Question 9

An asset was purchased for $120,000 on January 1, Year 1 and originally estimated to have a useful life of 10 years with a residual value of $10,000. At the beginning of the third year, it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,000. Calculate the third-year depreciation expense using the revised amounts and straight-line method.

Accepted Answer

A)  $24,000 
B)  $25,000 
C)  $11,000 
D)  $24,500

Question 10

Long-lived assets that are intangible in nature, used in the operations of the business and not held for sale in the ordinary course of business are called fixed assets.

Accepted Answer

A) True 
 B)False

Question 11

It is not necessary for a company to use the same depreciation method for financial statements and for determining income taxes.

Accepted Answer

A) True 
 B)False

Question 12

Classify each of the following as:
-Resurfacing a pool in an apartment building

Accepted Answer

A) Ordinary maintenance and repairs 
B) Asset improvements 
C) Extraordinary repairs

Question 13

Chasteen Company acquired mineral rights for $9,100,000. The mineral deposit is estimated at 65,000,000 tons. During the current year, 18,375,000 tons were mined and sold.
Required:
1) Determine the amount of depletion expense for the current year.
2) Journalize the adjusting entry to recognize the depletion expense.

Accepted Answer

The answer of Chasteen Company acquired mineral rights for $9,100,000....

Question 14

Match each account name to the financial statement section a-i) in which it would appear.
-Buildings

Accepted Answer

A) Current Assets 
B) Fixed Assets 
C) Intangible Assets 
D) Current Liability 
E) Long-Term Liability
F)Owners' Equity
G)Revenues
H)Operating Expenses
I)Other Income/Expense

Question 15

Match each account name to the financial statement section a-i) in which it would appear.
-Trademarks

Accepted Answer

A) Current Assets 
B) Fixed Assets 
C) Intangible Assets 
D) Current Liability 
E) Long-Term Liability
F)Owners' Equity
G)Revenues
H)Operating Expenses
I)Other Income/Expense

Question 16

A copy machine acquired on July 1 with a cost of $1,450 has an estimated useful life of 4 years. Assuming that it will have a residual value of $250, determine the depreciation for the first year by the double-declining-balance method.

Accepted Answer

The answer of A copy machine acquired on July 1...

Question 17

Classify each of the following costs associated with long-lived assets as one of the following:
-Modifying a building purchased for new business location

Accepted Answer

A) Land improvements 
B) Buildings 
C) Land 
D) Machinery and equipment

Question 18

Land acquired so it can be resold in the future is listed on the balance sheet as an)

Accepted Answer

A)  fixed asset 
B)  intangible asset 
C)  investment 
D)  current asset

Question 19

On the first day of the fiscal year, a new walk-in cooler with a list price of $58,000 was acquired in exchange for an old cooler and $44,000 cash. The old cooler had a cost of $25,000 and accumulated depreciation of $16,000. Assume the transaction has commercial substance.
a) Determine the gain to be recorded on the exchange.
b) Journalize the entry to record the exchange.

Accepted Answer

The answer of On the first day of the fiscal...

Question 20

On July 1, 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 31.
b) Calculate the third year's depreciation expense and provide the journal entry for the third year ending
December 31.
c) Calculate the last year's depreciation expense and provide the journal entry for the last year.

Accepted Answer

The answer of On July 1, Harding Construction purchases a...

Exam 9: Fixed Assets and Intangible Assets

Classify each of the following costs associated with long-lived assets as one of the following: -Sales taxes paid on new factory equipment

Match each account name to the financial statement section a-i) in which it would appear. -Loss from Impaired Goodwill

When a company exchanges machinery and receives a trade-in allowance less than the book value, this transaction would be recorded with which of the following entry?

A machine costing $57,000 with a 6-year life and $54,000 depreciable cost was purchased January 1. Compute the yearly depreciation expense using straight-line depreciation.

Machinery was purchased on January 1 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 the second year would be round calculations to the nearest dollar) :

If a fixed asset, such as a computer, were purchased on January 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is

Long-lived assets that are intangible in nature, used in the operations of the business and not held for sale in the ordinary course of business are called fixed assets.

It is not necessary for a company to use the same depreciation method for financial statements and for determining income taxes.

Classify each of the following as: -Resurfacing a pool in an apartment building

Match each account name to the financial statement section a-i) in which it would appear. -Buildings

Match each account name to the financial statement section a-i) in which it would appear. -Trademarks

A copy machine acquired on July 1 with a cost of $1,450 has an estimated useful life of 4 years. Assuming that it will have a residual value of $250, determine the depreciation for the first year by the double-declining-balance method.

Classify each of the following costs associated with long-lived assets as one of the following: -Modifying a building purchased for new business location

Land acquired so it can be resold in the future is listed on the balance sheet as an)