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Exam 9: Fixed Assets and Intangible Assets

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Question 31

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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

A)
B)
C)
D)

E) A) and D)
F) A) and B)

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Question 32

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A machine costing $185,000 with a 5-year life and $20,000 residual value was purchased January 2.Compute depreciation for each of the five years,using the double-declining-balance method.

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1 Year 1 $185,000 × 0.40 = $7...

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Question 33

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

The cost of repairing damage to a machine during installation is debited to a fixed asset account.

Solare Company acquired mineral rights for $60,000,000.The diamond deposit is estimated at 6,000,000 tons.During the current year,2,300,000 tons were mined and sold. a.Determine the depletion rate. b.Determine the amount of depletion expense for the current year. c.Journalize the adjusting entry to recognize the depletion expense.

Land acquired as a speculation is reported under Investments on the balance sheet.

Newport Company has sales of $2,025,000 for the current year.The book value of its fixed assets at the beginning of the year was $550,000 and at the end of the year was $800,000.The fixed asset turnover ratio for Newport is

The ratio measuring the number of dollars of sales earned per dollar of fixed assets is the

The process of transferring the cost of an asset to an expense account is called all of the following except

For income tax purposes,most companies use an accelerated deprecation method called double declining balance.

The depreciable cost of a building is the same as its acquisition cost.

Equipment costing $80,000 with a useful life of 10 years and a residual value of $8,000 has been depreciated for 6 years by the straight-line method.Assume a fiscal year ending December 31. a What is the book value at the end of the sixth year of use? b If early in the seventh year it is estimated that the remaining useful life is 5 years instead of 4 and the residual value is $6,000,what is the amount of depreciation for the seventh year?

The units-of-output depreciation method provides a good match of expenses against revenue.

Which intangible assets are amortized over their useful life?

The name,term,or symbol used to identify a business and its products is called

The calculation for annual depreciation using the units-of-output method is

A fixed asset with a cost of $41,000 and accumulated depreciation of $36,000 is traded for a similar asset priced at $50,000 fair market value in a transaction with commercial substance.Assuming a trade-in allowance of $4,000,at what cost will the new equipment be recorded in the books?

Capital expenditures are costs that are charged to stockholders' equity accounts.

Equipment acquired on January 2,Year 1,at a cost of $525,000 has an estimated useful life of eight years and an estimated residual value of $45,000. Required: 1 What is the annual amount of depreciation for the first three years,assuming the straight-line method of depreciation is used? 2 What is the book value of the equipment on January 1,Year 4? 3 Assuming that the equipment is sold on January 2,Year 4,for $326,000,journalize the entry to record the sale. 4 Assuming that the equipment is sold on January 2,Year 4,for $394,000 instead of $168,500,journalize the entry to record the sale.

Fill in the missing numbers using the formula for fixed asset turnover: $\begin{array}{|l|r|r|r|r|}\hline & \text { Company A } & \text { Company B } & \text { Company C } & \text { Company D } \\\hline \text { Sales } & \$ 5,000,000 & \$ 720,000 & \$ 900,000 & ?\\\hline \text { Beginning fixed assets } & \$ 450,000 & \$ 275,000 & ? & \$ 380,000 \\\hline \text { Ending fixed assets } & \$ 800,000 & ? & \$ 310,000 & \$ 420,000 \\\hline \text { Fixed asset turnover } & ? & 2.4 \text { times } & 3 \text { times } & 2.6 \text { times } \\\hline\end{array}$