Question 1

A company purchased property for a building site.The costs associated with the property were:
$\begin{array}{|l|r|}
\hline \text { Purchase price } & \$ 175,000 \
\hline \text { Real estate commissions } & 15,000 \
\hline \text { Legal fees } & 800 \
\hline \text { Expenses of clearing the land } & 2,000 \
\hline \text { Expenses to remove old building } & 1,000\
\hline 
\end{array}$
What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?

Accepted Answer

A) $175,800 to Land; $18,800 to Building 
B) $190,000 to Land; $3,800 to Building 
C) $190,800 to Land; $1,000 to Building 
D) $192,800 to Land; $0 to Building 
E) $193,800 to Land; $0 to Building

Question 2

______________________ depreciation charges a varying amount to expense for each period of an asset's useful life depending on its usage.

Accepted Answer

The answer of ______________________ depreciation charges a varying amount to...

Question 3

On April 1,2010,a company discarded a computer that cost $15,000 and that had a useful life of 4 years and a salvage value of $1,000.Using straight-line depreciation,the accumulated depreciation as of December 31,2009 was $10,700.
a. Prepare the journal entry to record depreciation up to the date of disposal of the computer
b. Prepare the journal entry to record the disposal of the computer.

Accepted Answer

The answer of On April 1,2010,a company discarded a computer...

Question 4

On April 1 of the current year,a company disposed of an automobile that had cost $20,000.The auto had a salvage value of $2,000 and a useful life of 5 years.The accounting records showed accumulated depreciation for this automobile of $8,100 as of April 1 of the current year.The asset was discarded after an accident occurred and $10,500 cash was received from an insurance claim.
Prepare the journal entry to record the disposal of the automobile.

Accepted Answer

The answer of On April 1 of the current year,a...

Question 5

Heidel Co.paid $750,000 cash to buy the plant assets of Rogers Co.that went out of business.An independent appraiser assigned the following values to the assets acquired:
 $$\begin{array} { | l | r | } 
\hline \text { Land } & \$ 522,000 \
\hline \text { Building } & 243,000 \
\hline \text { Equipment } & \underline { 135,000 } \
\hline \text { Total } & \$ 900,000 \
\hline
\end{array}$$ 
Prepare Heidel's journal entry to record the acquisition of these assets.

Accepted Answer

The answer of Heidel Co.paid $750,000 cash to buy the...

Question 6

On April 1,2010,a company disposed of equipment for $14,200 cash that had cost $35,000 on January 1,2005.The equipment had a salvage value of $5,000 and a useful life 10 years.The double-declining-balance depreciation method was used.On December 31,2009,accumulated depreciation was $20,664.Prepare a journal entry to record depreciation for 2010 up to the date of disposal of the equipment and prepare a journal entry to record the disposal of the equipment.

Accepted Answer

The answer of On April 1,2010,a company disposed of equipment...

Question 7

The most frequently used method of depreciation is the straight-line method.

Accepted Answer

A) True 
 B)False

Question 8

A company recently paid $1,500,000 to buy a building with an estimated useful life of 20 years and a salvage value of $25,000.Calculate the depreciation expense for the third year after acquisition using the double-declining-balance depreciation.

Accepted Answer

The answer of A company recently paid $1,500,000 to buy...

Question 9

A company sold equipment for $50,000.Total accumulated depreciation at the time of the sale was $20,000 and a loss of $10,000 was recognized on the sale.What was the original cost of the asset?

Accepted Answer

A) $60,000 
B) $80,000 
C) $70,000 
D) $40,000 
E) $30,000

Question 10

A company purchased a music distributor's collection of lyrics and songs for $1,425,000.The copyrights are expected to last another 30 years.Prepare the journal entry to record the amortization expense for the first year.

Accepted Answer

The answer of A company purchased a music distributor's collection...

Question 11

_______________________ depreciation recognizes equal amounts of annual depreciation over the life of an asset.

Accepted Answer

The answer of _______________________ depreciation recognizes equal amounts of annual...

Question 12

A company purchased equipment valued at $825,000 on January 1.The equipment has an estimated useful life of seven years or six million units.The equipment is estimated to have a salvage value of $35,000.Assuming the straight-line method of depreciation,what is the book value at the end of the second year if .5 million units were produced?

Accepted Answer

The answer of A company purchased equipment valued at $825,000...

Question 13

The formula for calculating total asset turnover is _______________________________________.

Accepted Answer

The answer of The formula for calculating total asset turnover...

Question 14

A company purchased a leasehold property for $8,400,000.The leasehold expires in 15 years.Prepare the journal entry to record the first year's amortization expense.

Accepted Answer

The answer of A company purchased a leasehold property for...

Question 15

Amortization:

Accepted Answer

A) Is the systematic allocation of the cost of an intangible asset to expense over its estimated useful life 
B) Is the process of allocating to expense the cost of a plant asset to the accounting periods benefiting from its use 
C) Is the process of allocating the cost of natural resources to periods when they are consumed 
D) Is an accelerated form of expensing an asset's cost 
E) Is the same as depletion

Question 16

Beauty Company purchased a machine valued at $565,000 on September 1.The equipment has an estimated useful life of eight years or 5.5 million units.The equipment is estimated to have a salvage value of $48,300.Assuming the double declining balance method of depreciation is used,what is the amount of depreciation expense that needs to be recorded at the end of the second year if 800,000 units were produced?

Accepted Answer

The answer of Beauty Company purchased a machine valued at...

Question 17

A copyright:

Accepted Answer

A) Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years 
B) Is an exclusive right granted to its owner to manufacture and sell a device or to use a process for 17 years 
C) Is an exclusive right granted to its owner to manufacture and sell a device or to use a process for 50 years 
D) Is the amount by which the value of a company exceeds the fair market value of a company's net assets if purchased separately 
E) Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 17 years

Question 18

Describe the accounting for intangible assets,including their acquisition,cost allocation and accounts involved.

Accepted Answer

The answer of Describe the accounting for intangible assets,including their...

Question 19

A company purchased equipment valued at $200,000 on January 1.The equipment has an estimated useful life of six years or five million units.The equipment is estimated to have a salvage value of $13,400.Assuming the double declining balance method of depreciation,what is the book value at the end of the second year if 1.5 million units were produced?

Accepted Answer

A)  $166,667.00 
B) $88,977.80 
C) $96,416.25 
D) $168,900.00 
E) $137,800.00

Question 20

On December 31,2010,Stable Company sold a piece of equipment that was purchased on January 1,2005.The equipment originally cost $820,000 and has an estimated useful life of eight years.Stable uses the straight-line method of depreciation.What is the gain/loss on the sale of equipment that Stable will recognize if the equipment was sold for $230,000?

Accepted Answer

A)  $230,000 Gain 
B) $25,000 Loss 
C) $25,000 Gain 
D) $73,750 Gain 
E) $0; no gain or loss

Exam 8: Reporting and Analyzing Long-Term Assets