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Exam 9: Fixed Assets and Intangible Assets

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Question 41

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When a plant asset is traded for another similar asset,losses on the asset traded are not recognized.

A) True
B) False

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Question 42

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The method used to calculate the depletion of a natural resource is the straight line method.

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B) False

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Question 43

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The difference between the balance in a fixed asset account and its related accumulated depreciation account is the asset's book value.

Equipment with a cost of $220,000 has an estimated residual value of $30,000 and an estimated life of 10 years or 19,000 hours.It is to be depreciated by the straight-line method.What is the amount of depreciation for the first full year,during which the equipment was used 2,100 hours?

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.

The proper journal entry to purchase a computer costing $975 on account on January 2 to be utilized within the business would be:

The journal entry for recording an operating lease payment would

A used machine with a purchase price of $77,000,requiring an overhaul costing $8,000,installation costs of $5,000,and special acquisition fees of $3,000,would have a cost basis of

Equipment was purchased on January 5,2011,at a cost of $90,000.The equipment had an estimated useful life of 8 years and an estimated residual value of $8,000. After using the equipment for 3 years,the useful life was revised to a total of 10 years and the residual value was reduced to $2,004. Determine the straight-line depreciation expense for the year 2014 and following years.

A characteristic of a fixed asset is that it is

Xtra Company purchased goodwill from Argus for $96,000.Argus had developed the goodwill over 12 years.How much would Xtra amortize the goodwill for its first year?

A new machine with a purchase price of $109,000,with transportation costs of $12,000,installation costs of $5,000,and special acquisition fees of $6,000,would have a cost basis of

Copy equipment was acquired at the beginning of the year at a cost of $72,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years.It is estimated that the machine has an estimated 1,000,000 copies.This year 315,000 copies were made.Determine the (a)depreciable cost, (b)depreciation rate,and (c)the units-of-production depreciation for the 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 $50,000.What is the amount of the gain or loss on this transaction?

Expenditures that increase operating efficiency or capacity for the remaining useful life of a fixed asset are betterments.

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.

Land acquired so it can be resold in the future is listed in the balance sheet as a(n)

Clanton Company engaged in the following transactions during 2011.Record each in the general journal below: 1)On January 3,2011,Clanton purchased a copyright from Dalton Company with a cost of $250,000 with a remaining useful life of 25 years. 2)On January 10,2011,Clanton purchased a trademark from Felton Company with a cost of $700,000. 3)On July 1,2011,Clanton purchased a patent from Garrison Company at a cost of $80,000.The remaining legal life of the patent is 15 years and the expected useful life is 11 years. 4)On July 2,2011,Clanton paid $30,000 in legal fees to defend the patent protection purchased on July 1,2011. 5)Recorded the appropriate amortization for the intangible assets for 2011. 6)Clanton Company includes an asset in its ledger recorded when Clanton purchased a computer service business at a price in excess of the fair value of the assets of the company in the amount of $400,000.At December 31,2011,$100,000 of this asset has become impaired.

When minor errors occur in the estimates used in the determination of depreciation,the amounts recorded for depreciation expense in the past should be corrected.

For each of the following fixed assets,determine the depreciation expense and the book value for the dates requested: Disposal date is N/A if asset is still in use. Method: SL = Straight Line;DDB = Double Declining Balance Assume the estimated life was 5 years for each asset.