FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 8: Accounting for Long-Term Assets

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

Spears Co. had net sales of $35,400 million. Its average total assets for the period were $14,700 million. Spears' total asset turnover equals:

A) 0.42.
B) 0.35.
C) 1.48.
D) 2.41.
E) 3.54.

F) C) and E)
G) B) and D)

Correct Answer

verified

Show Answer

Question 62

Multiple Choice

Review LaterAdd Note

Review Later

Granite Company purchased a machine costing $120,000, terms 1/10, n/30. The machine was shipped FOB shipping point and freight charges were $2,000. The machine requires special mounting and wiring connections costing $10,000. When installing the machine, $1,300 in damages occurred. Compute the cost recorded for this machine assuming Granite paid within the discount period.

A) $129,800.
B) $132,100.
C) $130,800.
D) $118,800.
E) $120,100.

F) B) and E)
G) A) and E)

Correct Answer

verified

Show Answer

Question 63

Multiple Choice

Review LaterAdd Note

An asset's book value is $36,000 on January 1, Year 6. The asset is being depreciated $500 per month using the straight-line method. Assuming the asset is sold on July 1, Year 7 for $25,000, the company should record:

Amortization is the process of allocating the cost of natural resources to periods when they are consumed.

Since goodwill is an intangible, it is amortized each year using the straight-line method, the same as other intangibles are amortized.

Explain in detail how to compute each of the following depreciation methods: straight-line, units-of-production, and double-declining-balance.

Martinez owns an asset that cost $87,000 with accumulated depreciation of $40,000. The company sells the equipment for cash of $42,000. At the time of sale, the company should record:

Intangible assets do not include:

When the usefulness of plant assets used to extract natural resources is directly related to the depletion of a natural resource, their costs are depreciated using the units-of-production method of depreciation, as long as the assets will not be moved to and used at another site when extraction of the natural resources is complete.

Once the estimated depreciation expense for an asset is calculated:

Plant assets can be disposed of by discarding, selling, or exchanging them.

The calculation of total asset turnover is:

When an asset is purchased (or disposed of) at a time other than the beginning or the end of an accounting period, depreciation is recorded for part of a year so that the year of purchase or the year of disposal is charged with its share of the asset's depreciation.

Total depreciation expense over an asset's useful life will be identical under all methods of depreciation.

The first step in accounting for an asset disposal is to calculate the gain or loss on disposal.

Peavey Enterprises purchased a depreciable asset for $22,000 on April 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $2,000, Peavey Enterprises should recognize depreciation expense in Year 2 in the amount of:

Marks Consulting purchased equipment costing $45,000 on January 1, Year 1. The equipment is estimated to have a salvage value of $5,000 and an estimated useful life of 8 years. Straight-line depreciation is used. If the equipment is sold on July 1, Year 5 for $20,000, the journal entry to record the sale will include a:

An asset's cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.

How is the cost principle applied to plant asset acquisitions, including lump-sum purchases?

Plant assets are used in operations and have useful lives that extend over more than one accounting period.