Name Chapter 9--Fixed Assets and Intangible Assets Description Instructions

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Question 1

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Question 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. Answer True False Add Question Here

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Question The acquisition costs of property, plant, and equipment should include all normal, reasonable and necessary costs to get the asset in place and ready for use. Answer True False Add Question Here

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Question When land is purchased to construct a new building, the cost of removing any structures on the land should be charged to the building account. Answer True False Add Question Here

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Question Land acquired as a speculation is reported under Investments on the balance sheet. Answer True False Add Question Here

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Question To a major resort, timeshare properties would be classified as property, plant and equipment. Answer True False Add Question Here

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Question Standby equipment held for use in the event of a breakdown of regular equipment is reported as property, plant, and equipment on the balance sheet. Answer True False Add Question Here

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Question The cost of repairing damage to a machine during installation is debited to a fixed asset account. Answer True False Add Question Here

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Question During construction of a building, the cost of interest on a construction loan should be charged to an expense account. Answer True False Add Question Here

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Question The cost of computer equipment does not include the consultant's fee to supervise installation of the equipment. Answer True False Add Question Here

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Question When cities give land or buildings to a company to locate in the community, no entry is made since there is no cost to the company. Answer True False Add Question Here

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Question Capital expenditures are costs of acquiring, constructing, adding, or replacing property, plant and equipment. Answer True

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Question The cost of new equipment is called a revenue expenditure because it will help generate revenues in the future. Answer True False Add Question Here

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Question Expenditures that increase operating efficiency or capacity for the remaining useful life of a fixed asset are betterments. Answer True False Add Question Here

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Question The cost of replacing an engine in a truck is an example of ordinary maintenance. Answer True False Add Question Here

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Question A capital lease is accounted for as if the asset has been purchased. Answer True False Add Question Here

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Question An operating lease is accounted for as if the lessee has purchased the asset. Answer True False Add Question Here

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Question An intangible asset is one that has a physical existence. Answer True False Add Question Here

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Question A capitalized asset will appear on the balance sheet as a long term asset. Answer True False Add Question Here

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Question Long lived assets held for sale are classified as fixed assets. Answer True False Add Question Here

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Question Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended. Answer True False Add Question Here

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Question The normal balance of the accumulated depreciation account is debit. Answer True False Add Question Here

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Question As a company depreciates a piece of equipment, it cash flow goes up. Answer True False Add Question Here

Question 23

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Question All property, plant, and equipment assets are depreciated over time. Answer True

Answer True False Add Question Here Question 29 True/False 0 points Modify Remove Question The units of production depreciation method matches expenses against revenue the best. Answer True False Add Question Here Question 30 True/False 0 points Modify Remove Question Once the useful life of a depreciable asset has been estimated and the amount to be depreciated each year has been determined. Answer True False Add Question Here Question 25 True/False 0 points Modify Remove Question The depreciable cost of a building is the same as its acquisition cost. Answer True False Add Question Here Question 31 True/False 0 points Modify Remove Question Residual value is not incorporated in the initial calculations for double-declining-balance depreciation. Answer True False Add Question Here Question 32 True/False 0 points Modify Remove Question The double-declining-balance method is an accelerated depreciation method. the amounts recorded for depreciation expense in the past should be corrected. Answer True False Add Question Here Question 28 True/False 0 points Modify Remove Question An estimate of the amount which an asset can be sold at the end of its useful life is called residual value. Answer True False Add Question Here Question 26 True/False 0 points Modify Remove Question It is necessary for a company to use the same depreciation method for all of its depreciable assets. Answer True False Add Question Here Question 34 True/False 0 points Modify Remove Question When minor errors occur in the estimates used in the determination of depreciation. the amounts can not be changed. Answer True False Add Question Here Question 33 True/False 0 points Modify Remove Question The double declining balance depreciation method calculates depreciation each year by taking twice the straight line rate times the book value of the asset at the beginning of each year. Answer True False Add Question Here Question 35 True/False 0 points Modify Remove .False Add Question Here Question 24 True/False 0 points Modify Remove Question The book value of a fixed asset reported on the balance sheet represents its market value on that date. Answer True False Add Question Here Question 27 True/False 0 points Modify Remove Question It is not necessary for a company to use the same depreciation method for financial statements and for determining income taxes.

with an estimated residual value of $5. depreciation should be recorded prior to removing it from service and the accounting records. is $19.000.000 and a useful life of 5 years or 20. a loss will result when the proceeds of the sale are less than the book value of the asset. is $25. Answer True False Add Question Here Question 36 True/False 0 points Modify Remove Question The amount of depreciation expense for a fixed asset costing $95.375 by the units-of-production method during a period when the asset was used for 4. Answer True False Add Question Here Question 43 True/False 0 points Modify Remove Question Capital expenditures are costs that are charged to Stockholders' Equity accounts. is $21. all years of the asset’s life are affected.500 hours. .000 and a useful life of 5 years.Question The amount of depreciation expense for the first full year of use of a fixed asset costing $95. Answer True False Add Question Here Question 37 True/False 0 points Modify Remove Question The amount of the depreciation expense for the second full year of use of a fixed asset costing $100. Answer True False Add Question Here Question 39 True/False 0 points Modify Remove Question For income tax purposes most companies use an accelerated deprecation method called double declining balance. Answer True False Add Question Here Question 41 True/False 0 points Modify Remove Question Regardless of the depreciation method.000 by the declining-balance method at twice the straight-line rate. Answer True False Add Question Here Question 46 True/False 0 points Modify Remove Question When selling a piece of equipment for cash. with an estimated residual value of $5. Answer True False Add Question Here Question 38 True/False 0 points Modify Remove Question When depreciation estimates are revised. Answer True False Add Question Here Question 42 True/False 0 points Modify Remove Question Revising depreciation estimates does affect the amounts of depreciation expense recorded in past periods. the amount that will be depreciated during the life of the asset will be the same. Answer True False Add Question Here Question 40 True/False 0 points Modify Remove Question Assets may be grouped according to common traits and depreciated by using a single composite rate.000 by the straight-line method. the equipment should be removed from the accounts if it has been fully depreciated. Answer True False Add Question Here Question 45 True/False 0 points Modify Remove Question If an asset has not been fully depreciated. with an estimated residual value of $5.000 operating hours. Answer True False Add Question Here Question 44 True/False 0 points Modify Remove Question Though a piece of equipment is still being used.000.000 and a useful life of 4 years.000.

Answer True False Add Question Here Question 48 True/False 0 points Modify Remove Question Ordinary gains from the sale of fixed assets should be reported in the other income section of the income statement. Answer True False Add Question Here True/False 0 points Modify Remove . Answer True False Add Question Here Question 54 True/False 0 points Modify Remove Question If a fixed asset with a book value of $10. losses on the asset traded are not recognized. Answer True False Add Question Here Question 53 True/False 0 points Modify Remove Question Since gains are not recognized in the exchange of similar assets. Answer True False Add Question Here Question 50 True/False 0 points Modify Remove Question When old equipment is traded in for a new equipment. Answer True False Add Question Here Question 52 True/False 0 points Modify Remove Question When exchanging equipment. and a trade-in allowance of $15. the difference between the list price and the trade in allowance is called boot. Answer True False Add Question Here Question 56 True/False 0 points Modify Remove Question Both the initial cost of the asset and the accumulated depreciation will be taken off the books with the disposal of the asset. if the trade-in allowance is greater than the book value a loss results. Answer True False Add Question Here Question 51 True/False 0 points Modify Remove Question When a plant asset is traded for another of similar asset.000 is traded for a similar fixed asset.000. the buyer would report a gain on disposal of fixed assets of $5. Answer True False Add Question Here Question 49 True/False 0 points Modify Remove Question A gain can be realized when a fixed asset is discarded. any gain or loss on the asset sold should be recorded.000 is granted by the seller. and equipment asset is sold for cash. the cost basis of the new asset is equal to the book value of the old asset plus boot. Answer True False Add Question Here Question 55 True/False 0 points Modify Remove Question The entry to record the disposal of fixed assets will include a credit to accumulated depreciation.Answer True False Add Question Here Question 47 True/False 0 points Modify Remove Question When a property. plant. Answer True False Add Question Here Question 57 True/False 0 points Modify Remove Question Minerals removed from the earth are classified as intangible assets.

000 by the sum-of-the-years’-digits method. Answer True False Add Question Here Question 64 True/False 0 points Modify Remove Question When a major corporation develops its own trademark and over time it becomes very valuable. or sell a particular product or process. Answer True False Add Question Here Question 67 True/False 0 points Modify Remove Question The-sum-of-the-years'-digits method is the only depreciation method that does not consider the plant asset's estimated residual value in the depreciation equation.000. the trademark may not be shown on their balance sheet due lack of a material cost. use. Answer True False Add Question Here Question 68 True/False 0 points Modify Remove Question The amount of depreciation expense for the first full year of use of a fixed asset costing $65.000 and a useful life of 5 years. Answer True False Add Question Here Question 59 True/False 0 points Modify Remove Question Intangible assets differ from property. Answer True False Add Question Here Question 65 True/False 0 points Modify Remove Question When a company establishes an outstanding reputation and has a competitive advantage because of it. is $20.Question 58 Question The method used to calculate the depletion of a natural resource is the straight line method. Answer True False Add Question Here Question 63 True/False 0 points Modify Remove Question Patents are exclusive rights to manufacture. the company should record goodwill on its financial statements. plant and equipment assets in that they lack physical substance. Answer True False Add Question Here Question 66 True/False 0 points Modify Remove Question The difference between the balance in a fixed asset account and its related accumulated depreciation account is the asset's book value. Answer True False Add Question Here Question 61 True/False 0 points Modify Remove Question The cost of a patent with a remaining legal life of 10 years and an estimated useful life of 7 years is amortized over 10 years. this amount is . with an estimated residual value of $5. Answer True False Add Question Here Question 60 True/False 0 points Modify Remove Question The transfer to expense of the cost of intangible assets attributed to the passage of time or decline in usefulness is called amortization. Answer True False Add Question Here Question 69 True/False 0 points Modify Remove Question When a seller allows a buyer an amount for old equipment that is traded in for new equipment of similar use. Answer True False Add Question Here Question 62 True/False 0 points Modify Remove Question Costs associated with normal research and development activities should be treated as intangible assets.

Answer True False Add Question Here Question 70 True/False 0 points Modify Remove Question An exchange is said to have commercial substance if future cash flows remain the same as a result of the exchange. B. G. . . . H.A. Patent B. Answer True False Add Question Here Question 71 Matching Question Classify each of the following as: Answer Match Question Items C.D. D. B.E. Ordinary Maintenance and Repairs B. Extraordinary Repairs Add Question Here Question 72 Matching 0 points Modify Remove Question Match the intangible assets with their proper classification Answer Match Question Items B. C.H. E.B. McDonald’s Golden Arches A. Asset Improvements C. . Copyright C. A. A. . Mickey Mouse Answer Items A. A new kitchen gadget that can be profited by only one company D. Nike Swoosh C. Goodwill Add Question Here Question 73 Multiple Choice 0 points Modify Remove Question A characteristic of a fixed asset is that it is Answer intangible used in the operations of a business held for sale in the ordinary course of the business a long term investment Add Question Here Question 74 Multiple Choice 0 points Modify Remove Question Land acquired so it can be resold in the future is listed in the balance sheet as a(n) Answer fixed asset current asset investment intangible asset Add Question Here Question 75 Multiple Choice 0 points Modify Remove Question Which of the following should be included in the acquisition cost of a piece of equipment? Answer transportation costs installation costs testing costs prior to placing the equipment into production all are correct Add Question Here Question 76 Multiple Choice 0 points Modify Remove Question Which of the following is included in the cost of constructing a building? Answer insurance costs during construction cost of paving parking lot cost of repairing vandalism damage during construction cost of removing the demolished building existing on the land when it was purchased Add Question Here Question 77 Multiple Choice 0 points Modify Remove Question Which of the following is included in the cost of land? Answer cost of paving a parking lot brokerage commission outdoor parking lot lighting attached to the land . Location of a company B.known as boot. B. A. 0 points Modify Remove Overhauling an engine in a large truck. B. Reputation of a company C.G. Exterior and interior painting Paving a new parking lot New landscaping Installing a new air conditioning system in an old building Resurfacing a pool in an apartment building Adding freon to an air conditioning system Fixing damage due to a car accident Answer Items A.C. F.F. . Trademark D. Rights to sell this book and make a profit C. A. . I-Tunes Music D. C. .

a 90-day note payable for $45.000 $85. requiring an overhaul costing $8.000 $107. and special acquisition fees of $3.000.000.000.fences on the land Add Question Here Question 78 Multiple Choice 0 points Modify Remove Question Accumulated Depreciation Answer is used to show the amount of cost expiration of intangibles is the same as Depreciation Expense is a contra asset account is used to show the amount of cost expiration of natural resources Add Question Here Question 79 Multiple Choice 0 points Modify Remove Question A building with an appraisal value of $147.000.000 Add Question Here Question 82 Multiple Choice 0 points Modify Remove Question Expenditures that add to the utility of fixed assets for more than one accounting period are Answer committed expenditures revenue expenditures current expenditures capital expenditures Add Question Here Question 83 Multiple Choice 0 points Modify Remove Question A capital expenditure results in a debit to Answer an expense account a stockholders’ equity account a liability account an asset account Add Question Here Question 84 Multiple Choice 0 points Modify Remove Question Which of the following below is an example of a capital expenditure? Answer cleaning the carpet in the front room tune-up for a company truck replacing an engine in a company car replacing all burned-out light bulbs in the factory Add Question Here Question 85 Multiple Choice 0 points Modify Remove Question In a lease contract.000 $82.000 Add Question Here Question 80 Multiple Choice 0 points Modify Remove Question A used machine with a purchase price of $77.000 in cash.000 $90. The purchaser acquires the property for $35. and a mortgage amounting to $65.000 Add Question Here Question 81 Multiple Choice 0 points Modify Remove Question A new machine with a purchase price of $94.000 $110. the party who legally owns the asset is the Answer lessee lessor operator banker Add Question Here Question 86 Multiple Choice Question All leases are classified as either Answer capital leases or long-term leases capital leases or operating leases 0 points Modify Remove .000.000 is made available at an offer price of $152. would have a cost basis of Answer $93.000.000.000 $145.000. installation costs of $5. and special acquisition fees of $2.000 $109.000.000.000 $152.000. installation costs of $5. with transportation costs of $8. would have a cost basis of Answer $ 99. The cost basis recorded in the buyer's accounting records to recognize this purchase is Answer $147.000 $102.

000 and an estimated life of 5 years or 15. the method of determining depreciation expense that best matches allocation of cost with revenue is Answer declining-balance straight-line units-of-production MACRS Add Question Here Question 94 Multiple Choice 0 points Modify Remove Question A machine with a cost of $80. What is the amount of depreciation for the first full year. What is the amount of depreciation for the second full year.000 and an estimated life of 5 years or 12.000 hours. during which the .667 Add Question Here Question 95 Multiple Choice 0 points Modify Remove Question Equipment with a cost of $130.000 has an estimated residual value of $10.000 $26. It is to be depreciated by the straight-line method. what two criteria must be met? Answer Must be an investment and must be long lived. Must be long lived and must be a tangible asset.000 has an estimated residual value of $5. Add Question Here Question 89 Multiple Choice 0 points Modify Remove Question Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two categories Answer salvage and functional physical and functional residual and salvage functional and residual Add Question Here Question 90 Multiple Choice 0 points Modify Remove Question A fixed asset's estimated value at the time it is to be retired from service is called Answer book value residual value market value carrying value Add Question Here Question 91 Multiple Choice 0 points Modify Remove Question All of the following below are needed for the calculation of straight-line depreciation except Answer cost residual value estimated life units produced Add Question Here Question 92 Multiple Choice 0 points Modify Remove Question The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is Answer units-of-production declining-balance straight-line time-valuation Add Question Here Question 93 Multiple Choice 0 points Modify Remove Question When the amount of use of a fixed asset varies from year to year.000 $15. Must be a tangible asset and must be an investment.000 hours? Answer $5.operating leases or current leases long-term leases or current leases Add Question Here Question 87 Multiple Choice 0 points Modify Remove Question The journal entry for recording an operating lease payment would Answer be a memo entry only debit the fixed asset and credit Cash debit an expense and credit Cash debit a liability and credit Cash Add Question Here Question 88 Multiple Choice 0 points Modify Remove Question When determining whether to record an asset as a fixed asset.000 $25. It is to be depreciated by the units-of-production method.000 hours. during which the machine was used 5. Must be long lived and must use the asset in a productive manner.

000.750 Add Question Here Question 96 Multiple Choice 0 points Modify Remove Question A machine with a cost of $75. The depreciation expense for the current and future years is Answer $11.200 Depreciation Expense 1.000 and an estimated life of 4 years or 18. using the double declining-balance method? Answer $17. were purchased on January 1st for $3. an estimated residual value of $40. What is the amount of depreciation for the second full year.500 $33.000 Add Question Here Question 99 Multiple Choice 0 points Modify Remove Question The depreciation method that does not use residual value in calculating the first year's depreciation expense is Answer straight-line units-of-production double-declining-balance none of the above Add Question Here Question 100 Multiple Choice 0 points Modify Remove Question If a fixed asset.000.equipment was used 3.350 Jan 2 Office Equipment 1. and an estimated life of 15 years was depreciated by the straight-line method for 4 years.000 has an estimated residual value of $5.350 Accounts Payable 1.300 hours? Answer $24.350 Jan 2 Office Equipment 1. such as a computer.350 Accounts Payable 1. Due to obsolescence.000 $35.350 Jan 2 Office Supplies 1.000 $32.750 with an estimated life of 3 years and a salvage or residual value of $150.200 Accumulated Depreciation 1. it was determined that the useful life should be shortened by 3 years and the residual value changed to zero.350 Add Question Here Question 102 Multiple Choice 0 points Modify Remove Question Residual value is also known as all of the following except Answer scrap value trade in value salvage value net book value Add Question Here Question 103 Multiple Choice 0 points Modify Remove .) Answer EOM Depreciation Expense 100 Accumulated Depreciation 100 EOM Depreciation Expense 1.000 $11.636 $16.000 hours.200 EOM Accumulated Depreciation 100 Depreciation Expense 100 Add Question Here Question 101 Multiple Choice 0 points Modify Remove Question The proper journal entry to purchase a computer on account to be utilized within the business would be: Answer Jan 2 Office Supplies 1.000 $8.500 $37.667 Add Question Here Question 97 Multiple Choice 0 points Modify Remove Question The most widely used depreciation method is Answer straight-line sum-of-the-years-digits declining-balance units-of-production Add Question Here Question 98 Multiple Choice 0 points Modify Remove Question Equipment with a cost of $160. the journal entry for monthly expense under straight-line depreciation is: (Note: EOM indicates the last day of each month.750 $16.500 $18.200 EOM Accumulated Depreciation 1.350 Accounts Receivable 1.350 Accounts Receivable 1.

none of the answers are correct.000. Add Question Here Question 109 Multiple Choice 0 points Modify Remove Question An asset was purchased for $120. Assuming a trade-in allowance of $4.000 $24. it is possible to depreciate more than the depreciable cost. Determine the 2nd year’s depreciation using straight-line depreciation.000 $51.residual value initial cost .500 $60. If using the units-of-production method.400 $13. it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2.000 and an estimated useful life of 5 years.000 . determined each year that the depreciation calculation is made.000 $24. Answer $26. After two years of straight line depreciation. If using the straight line method. the cost basis of the new asset is Answer $54. the amount of depreciation expense during the first year is higher than that of the doubledeclining-balance.800 $12.000 and accumulated depreciation of $47. Assuming a trade-in allowance of $5.000.000 that has an estimated residual value of $3.000 $24.500 Add Question Here Question 111 Multiple Choice 0 points Modify Remove Question A fixed asset with a cost of $41.000.000 is traded for a similar asset priced at $50. the cost basis of the new asset is Answer $54.500 is traded for a similar asset priced at $60.000 $45. 0 points Modify Remove estimated at the time that the asset is placed in service.Question The formula for depreciable cost is Answer initial cost + residual value initial cost .000 and originally estimated to have a useful life of 10 years with a residual value of $10. Calculate this year’s depreciation using the revised amounts and straight line method.000 $59.000 and accumulated depreciation of $36.000. the amount of total depreciation expense during the life of the asset will be the same.000 Add Question Here Question 108 Multiple Choice 0 points Modify Remove Question Which of the following is true? Answer If using the double-declining-balance the total amount of depreciation expense during the life of the asset will be the highest.000.000. Add Question Here Question 105 Multiple Choice 0 points Modify Remove Question The calculation for annual depreciation using the straight-line depreciation method is Answer initial cost / estimated useful life depreciable cost / estimated useful life depreciable cost * estimated useful life initial cost * estimated useful life Add Question Here Question 106 Multiple Choice 0 points Modify Remove Question The calculation for annual depreciation using the units-of-production method is Answer (initial cost/estimated output) * the actual yearly output (depreciable cost / yearly output) * estimated output depreciable cost / yearly output (depreciable cost / estimated output) * the actual yearly output Add Question Here Question 107 Multiple Choice 0 points Modify Remove Question Computer equipment was acquired at the beginning of the year at a cost of $65.000 $11.500 Add Question Here Question 110 Multiple Choice 0 points Modify Remove Question A fixed asset with a cost of $52.000 $60.accumulated depreciation depreciable cost = initial cost Add Question Here Question 104 Multiple Choice Question Expected useful life is Answer calculated when the asset is sold. Answer $25. Regardless of the depreciation method.

credit Accumulated Depreciation Add Question Here Question 117 Multiple Choice 0 points Modify Remove Question When a company exchanges machinery and receives a trade-in allowance greater than the book value. credit Accumulated Depreciation Add Question Here Question 116 Multiple Choice 0 points Modify Remove Question When a company sells machinery at a price equal to its book value.000 loss $1.000 Add Question Here Multiple Choice 0 points Modify Remove .500 Add Question Here Question 113 Multiple Choice 0 points Modify Remove Question A fixed asset with a cost of $30. credit Accumulated Depreciation debit Cash.000 gain Add Question Here Question 114 Multiple Choice 0 points Modify Remove Question The Bacon Company acquired new machinery with a price of $15.700 a gain of $1. Assuming a trade-in allowance of $3.700 the new machinery at $12. In recording this transaction. credit Accumulated Depreciation and Machinery Add Question Here Question 118 Multiple Choice 0 points Modify Remove Question When a company exchanges machinery and receives a trade-in allowance less than the book value.000.200 by trading in similar old machinery and paying $12. Strike Company has decided to discard one of its batting cages. this transaction would be recorded with the following entry: Answer debit Machinery and Accumulated Depreciation.500 $ 500 $1. credit Machinery debit Machinery.000 $4. Cash. credit Machinery and Cash Add Question Here Question 119 Multiple Choice 0 points Modify Remove Question On December 31. The old machinery originally cost $9. What is the amount of the gain or loss on disposal of the fixed asset? Answer $2. this transaction would be recorded with the following entry: Answer debit Machinery and Accumulated Depreciation.000 with an accumulated depreciation of $185. Accumulated Depreciation.500. Depreciation has been taken up to the end of the year. the recognized loss on the trade is Answer $3.$50. Answer Accumulated Depreciation Dr. and Gain on Disposal debit Machinery and Accumulated Depreciation.500 a loss of $1. this transaction would be recorded with the following entry Answer debit Accumulated Depreciation. credit Accumulated Depreciation and Machinery debit Machinery.000 and accumulated depreciation of $28.000 Loss on Disposal of Asset $185. credit Machinery.500 is traded for a similar asset priced at $60.500 gain $2. credit Accumulated Depreciation debit Cash and Machinery.000.000. credit Machinery and Cash debit Cash and Machinery.500 loss $3. credit Machinery and Cash debit Cash and Machinery. $215. The initial cost of the equipment was $215. this transaction would be recorded with an entry that would include the following: Answer debit Cash and Accumulated Depreciation. $215. The following will be included in the entry to record the disposal.000 Gain on Disposal of Asset $30.500 Add Question Here Question 115 Multiple Choice 0 points Modify Remove Question When a company discards machinery that is fully depreciated. Bacon Company should record Answer the new machinery at $16. credit Accumulated Depreciation debit Depreciation Expense.500 is sold for $3.000.000 Add Question Here Question 112 Multiple Choice 0 points Modify Remove Question A fixed asset with a cost of $41. credit Accumulated Depreciation debit Cash and Depreciation Expense. credit Machinery debit Machinery. and Loss on Disposal. credit Accumulated Depreciation debit Cash and Machinery.000 Equipment Cr.000 and accumulated depreciation of $36.700. credit Cash and Accumulated Depreciation debit Cash and Machinery.000 and had accumulated depreciation of $5.

Add Question Here Question 125 Multiple Choice 0 points Modify Remove Question When a company replaces a component of property. Depreciation has been taken up to the end of the year. The seller of the batting cage is willing to allow a trade-in amount of $40. What is the amount of the gain or loss on this transaction? Answer Loss of $11.000 Gain of $11. The company found a company that is willing to buy the equipment for $55. What is the amount of the gain or loss on this transaction? Answer Cannot be determined No gain or loss Gain of $25.000 Loss of $10. Strike Company has decided to sell one of its batting cages.000.000. Add Question Here Question 124 Multiple Choice 0 points Modify Remove Question On December 31.000 with an accumulated depreciation of $185.000. What is the amount of the gain or loss on this transaction? Answer Gain of $30. The initial cost of the old equipment was $225. What is the amount of the gain or loss on this transaction? Answer Gain of $20. Depreciation has been taken up to the end of the year.Question 120 Question On December 31. The seller of the batting cage is willing to allow a trade-in amount of $11.000 with an accumulated depreciation of $185. The difference will be paid in cash. The initial cost of the equipment was $215.000. plant and equipment. The initial cost of the equipment was $215. Depreciation has been taken up to the end of the year. Strike Company has decided to sell one of its batting cages.000. which statement below does not account for one of the steps to this process? Answer book value of the replaced component is written off to depreciation expense the asset cost of the replaced component is credited any cost to remove the old component is charged to expense the identifiable direct costs associated with the new component are capitalized Add Question Here Question 126 Multiple Choice Question The accumulated depletion account is Answer an expense account 0 points Modify Remove an intangible asset account reported on the income statement as other expense reported on the balance sheet as a deduction from the cost of the mineral deposit Add Question Here Question 127 Multiple Choice 0 points Modify Remove Question The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called Answer depletion deferral amortization depreciation Add Question Here Multiple Choice 0 points Modify Remove . Strike Company has decided to trade-in one of its batting cages for another one that has a cost of $500.000 with an accumulated depreciation of $195.000. Strike Company has decided to sell one of its batting cages.000 Gain of $55. What is the amount of the gain or loss on this transaction? Answer The gain will not be recognized and will be added to the price of the old equipment.000 with an accumulated depreciation of $185.000 No loss or gain will be recorded.000 Loss of $30.000 No gain or loss Cannot be determined Add Question Here Question 122 Multiple Choice 0 points Modify Remove Question On December 31.000. The difference will be paid in cash.000 with an accumulated depreciation of $185. The initial cost of the equipment was $215.000. Depreciation has been taken up to the end of the year.000. Strike Company has decided to trade-in one of its batting cages for another one that has a cost of $500. The company found a company that is willing to buy the equipment for $20.000 No gain or loss Cannot be determined Add Question Here Question 121 Multiple Choice 0 points Modify Remove Question On December 31. The gain will not be recognized and will be added to the price of the new equipment The gain will not be recognized and will be subtracted from the price of the old equipment The gain will not be recognized and will be subtracted from the price of the new equipment.000 Add Question Here Question 123 Multiple Choice 0 points Modify Remove Question On December 31.000.000. The company found a company that is willing to buy the equipment for $30.000 Loss of $19. The initial cost of the old equipment was $215. Depreciation has been taken up to the end of the year.000.

How much would Xtra amortize the goodwill for its first year? Answer $8. based upon the following data? Land purchase price Broker's commission Payment for the demolition and removal of existing building Cash received from the sale of materials salvaged from the demolished building $178.000.000 Add Question Here Question 136 Essay 0 points Modify Remove Question What is the cost of the land. Argus had developed the goodwill over 6 years. During 2009.000 .000 tons of ore. The depletion expense for 2009 is Answer $10.000.000.929 $6.500 $9.000 15.000 Goodwill is not amortized.000 on July 1. 2009 for $51.200 $16. The company expects to mine ore for the next 10 years and anticipates that a total of 100. Not enough information.000 $10.800 $20.640 $24. The machinery has an estimated life of 7 years and an estimated salvage value of $9. Add Question Here Question 132 Multiple Choice 0 points Modify Remove Question Which intangible assets are amortized over their useful life? Answer trademarks goodwill patents all of the above Add Question Here Question 133 Multiple Choice 0 points Modify Remove Question The exclusive right to use a certain name or symbol is called a Answer franchise patent trademark copyright Add Question Here Question 134 Multiple Choice 0 points Modify Remove Question Fixed assets are ordinarily presented in the balance sheet Answer at current market values at replacement costs at cost less accumulated depreciation in a separate section along with intangible assets Add Question Here Question 135 Multiple Choice 0 points Modify Remove Question Machinery was purchased on January 1.000 5.000 tons will be recovered. Sum-of-the-years'-digits depreciation for 2010 would be Answer $10. 2009. The estimated residual value of the property is $80. the company extracted and sold 4.000 Add Question Here Question 129 Multiple Choice 0 points Modify Remove Question Expenditures for research and development are generally recorded as Answer current operating expenses assets and amortized over their estimated useful life assets and amortized over 40 years current assets Add Question Here Question 130 Multiple Choice 0 points Modify Remove Question The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is Answer amortization depletion depreciation allocation Add Question Here Question 131 Multiple Choice 0 points Modify Remove Question Xtra Company purchased goodwill from Argus for $144.Question 128 Question The Weber Company purchased a mining site for $500.000.500 $43.000 2.

Answer a) $5. Assume that an asset has a useful life of 25 years. Determine the (a) depreciable cost." Answer Depreciation is the periodic transfer of the cost of an asset to expense.400 (3) Year 3 $30. Compton Co.000 (2) Year 2 $51.048 per copy (c) $11. Depreciation is a noncash expense.000 and originally estimated to have a useful life of 10 years with a residual value of $3. Answer 4% * 2 = 8% Add Question Here Question 141 Essay 0 points Modify Remove Question Copy equipment was acquired at the beginning of the year at a cost of $56.000 (b) 25% (c) $10.016 Add Question Here Question 144 Essay 0 points Modify Remove Question Computer equipment was acquired at the beginning of the year at a cost of $63.40 = $7. Compute depreciation for each of the five years. Journalize the entries for the delivery truck and oil change expenditures.016 . (b) straight-line rate.000 copies were made.40 = $20.000 with a 5-year life and $5. Compute the yearly depreciation expense using straight-line depreciation.$3. This year 240. c) Determine the depreciation expense for each of the remaining years after revision.000 that has an estimated residual value of $8. it was determined that the remaining useful life of the asset was only 2 years with a residual value of $2.500 b) $47.000 c) $22.000 with a 6-year life and $3.000 that has an estimated residual value of $3.000) = $54.520 (240000*.40 = $12.000 (b) 40% (c) $25. 2009. (b) depreciation rate.048) Add Question Here Question 142 Essay 0 points Modify Remove Question A machine costing $57.000 ÷ 6 years = $9.000 (b) $0.000 * 40%) Add Question Here Question 145 Essay 0 points Modify Remove Question An asset was purchased for $58. Determine the (a) depreciable cost (b) double-declining-balance rate.000 and an estimated useful life of 5 years. a double-declining balance rate is determined by doubling the straight-line rate.000 copies. 2009.500 Add Question Here Question 146 Essay 0 points Modify Remove .600 × . cash needs to be set aside to replace it.5. Add Question Here Question 138 Essay 0 points Modify Remove Question On April 15.000 = $6. Answer (a) $60.200 ($63.350 15 Repairs and maintenance Exp Cash 45 45 Add Question Here Question 139 Essay 0 points Modify Remove Question Computer equipment was acquired at the beginning of the year at a cost of $45.000 Add Question Here Question 137 Essay 0 points Modify Remove Question Comment on the validity of the following statements. Answer April 15 Delivery Truck 1.000 that has an estimated residual value of $3.350 Cash 1. Calculate this year’s depreciation using the revised amounts and straight line method.000 and an estimated useful life of 4 years. and (c) the units-of-production depreciation for the year. Answer (a) $48.240 (4) Year 4 $18.000 and an estimated useful life of 5 years.000 × . paid $1.000 .500 Add Question Here Question 140 Essay 0 points Modify Remove Question In using this method.000. and (c) annual straight-line depreciation. using the declining-balance method at twice the straight-line rate.350 to upgrade a delivery truck and $45 for an oil change. Depreciation accomplishes this goal. Answer (a) $42.Answer $196. and (c) doubledeclining-balance depreciation for the first year.000. After two years of straight line depreciation.000 residual value was purchased January 2.360 × . "As an asset loses its ability to provide services. It is estimated that the machine has an estimated 1. b) Determine the book value at the end of the 2nd year. Depreciation does not accumulate cash for replacements.344 (5) Year 5 $11. a) Determine the amount of the annual depreciation for the first two years. determine the rate to be used if using the double-declining balance method.000. Determine the (a) depreciable cost.000 residual value was purchased January 2. Answer (1) Year 1 $85.000 per year Add Question Here Question 143 Essay 0 points Modify Remove Question A machine costing $85.40 = $34.000 × . Answer ($57.

900 and the balance in Accumulated DepreciationTrucks is $88. delinquent taxes assessed were $12. A contractor was paid $910.925 Demolition of building 18. a) b) c) Answer What was the depreciation for the first year? Assuming the equipment was sold at the end of the second year for $59. Journalize the entry to record the sale.000 22. The old cooler had a cost $24.250 b) $6.425 Delinquent taxes 12.000 $13. a) List price Trade In NBV of old cooler.500 Cost of land $437. stated as a percentage.Question Equipment was acquired at the beginning of the year at a cost of $75.000.000 23. 2. Legal fees paid were $11. Determine the amount of depletion expense for the current year.000 10.000 Add Question Here Question 149 Essay 0 points Modify Remove Question Falcon Company acquired an adjacent lot to construct a new warehouse.425 Add Question Here Question 150 Essay 0 points Modify Remove Question Convert each of the following estimates of useful life to a straight-line depreciation rate. a) b) c) $10 per ton $23.000 41. a) $11.000 -30.000.000 Answer b) Equipment (new) Accum.000 17. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7.000 were mined and sold.000 to construct a new warehouse. and fees paid to remove an old building from the land were $18.500.925 Less: Salvage of materials 4. Journalize the adjusting entry to recognize the depletion expense. a.000. a new walk-in cooler with a list price of $52. Details of the subsidiary ledger are as follows: Truck No.5% (1/8) (3) 10% (1/10) (4) 5% (1/20) (5) 4% (1/25) (6) 2.300. c.000 Dec 31 Depletion Expense Accumulated Depletion Depletion of mineral deposit 23.000 $49.000 cash.500 $441. paying $30.000 and accumulated depreciation of $17.000.000 and giving a short-term note for $370.500 Add Question Here Question 147 Essay 0 points Modify Remove Question On the first day of the fiscal year.000 + $370. determine the gain or loss on sale of the equipment.000 .000.500 Gain c) Cash Accumulated Depreciation Equipment Gain on Sale of Asset 59. The diamond deposit is estimated at 6. Answer Determine the depletion rate.000 300. Answer Initial cost of land ($30. a) b) Determine the cost of the new cooler for financial reporting purposes. assuming that the residual value of the fixed asset is to be ignored: (1) (2) (3) (4) (5) (6) (7) Answer 2 years 8 years 10 years 20 years 25 years 40 years 50 years (1) 50% (1/2) (2) 12.000 42. Materials salvaged from the demolition of the building were sold for $4. Cost Estimated Residual Estimated Useful Life Accumulated Depreciation at Miles Operated Beginning of Year Value During Year 1 $100. the balance in Trucks is $250.000.000 Add Question Here Question 148 Essay 0 points Modify Remove Question Solare Company acquired mineral rights for $60.000 7.200.425.000 3.000 24.500. Journalize the entry to record the exchange. Depreciation Equipment Cash 49.000.000 6.000.000.000.000 was acquired in exchange for an old cooler and $42.000 Plus: Legal fees 11.500.000 tons.000.5% (1/40) (7) 2% (1/50) Add Question Here Question 151 Essay 0 points Modify Remove Question Prior to adjustment at the end of the year. During the current year.000) $400. Unrealized gain Cost of new truck $52.500 75. Determine the cost of the land to be reported on the balance sheet and show your work. b.

975 34.500 Add Question Here Question 155 Essay 0 points Modify Remove Question Icon Company acquired patent rights on January 1.750 × 3)] Cash Accumulated Depreciation—Equipment Loss on Disposal of Fixed Assets Equipment Cash Accumulated Depreciation—Equipment Equipment Gain on Disposal of Fixed Assets 170. journalize the entry to record the sale.000* 7.000 40. Required: (1) (2) Answer Determine the amount of depletion expense for the current year.000 900 900 Add Question Here Question 153 Essay 0 points Modify Remove Question Equipment acquired on January 2.500 – ($29.000.500.600. Answer Prepare the journal entries necessary for recording the purchase of the new carpet.000 tons = $0. 18.5 Miles Operated 30. The patent has a useful life equal to its legal life of 15 years.000 300. a.337. 2012? Assuming that the equipment was sold on January 2.000/15 years) × 9/12].000. (2) Depreciation Expense—Trucks Accumulated Depreciation—Trucks 34.750.750 2011 depreciation expense: $29.0 17.500 189.900 3.900. 2012. Required: (1) (2) (3) (4) Answer What was the annual amount of depreciation for the years 2009. 2.250 (21 cents × 25.050 20.000/80.000 200. 30 31 Carpet Cash Depreciation Expense Accumulated Depreciation Carpet depreciation [($18.000.2 3 4 72. b.500)/8] 2010 depreciation expense: $29. Mar. Dec.000) is limited to $3. 2012.500 4.600. and 2011.000 200. 2009 for $1. Journalize the adjusting entry to recognize the depletion expense. Answer (1) Truck No.975 *Mileage depreciation of $5. On January 2.000 90.000 tons were mined and sold.500 depletion expense Depletion Expense Accumulated Depletion Depletion of mineral deposit.000 40.500 89.750 273. its residual value. The mineral deposit is estimated at 80.900 38.000 8.000. Assuming that the equipment had been sold on January 2.500 2. which reduces the book value of the truck to $9.000 25. The carpet is estimated to have a 15-year useful life and no residual value.500 – $35. a.000 45.500.000 18.250 273. 2009 at a cost of $273.000 × $0. 2010.000 Required: (1) Determine the depreciation rates per mile and the amount to be credited to the accumulated depreciation section of each of the subsidiary accounts for the miles operated during the current year.000 89.400 34. Record the December 31 adjusting entry for the partial-year depreciation expense for the carpet assuming that Champion Company uses the straight-line method.750.000 tons.000 $60.250 13. (1) (2) $13.150 25. for $189. (2) Journalize the entry to record depreciation for the year.250 [$273. journalize the entry to record the sale. assuming the straight-line method of depreciation is used? What was the book value of the equipment on January 1.975 Add Question Here Question 152 Essay 0 points Modify Remove Question Champion Company purchased and installed carpet in its new general offices on March 30 for a total cost of $18. 2012. Icon successfully defended the patent in a lawsuit at a cost of $90. b.750 [($273.500 has an estimated useful life of eight years and an estimated residual value of $35.000.700 3.337.750 Add Question Here (2) (3) (4) Question 154 Essay 0 points Modify Remove Question Chasteen Company acquired mineral rights for $13. for $170.5 38.000 Depreciation $8. (1) 2009 depreciation expense: $29. .875 15.337.000.17 = $2.750 $184.000 instead of $168.000 45.125.17 depletion per ton 13. 13.0 cents 21. During the current year.000.000 9.000 13. 1 2 3 4 Total Rate per Mile 29.500.

000 on June 1.281 Preceding Year $361 470 81 569 $1.000 × 9/12).000 and an estimated useful life of eight years.000/12) = $82. A comparison of the total cost and accumulated depreciation reveals that Harrison purchased $694 million ($2. Answer (1) (2) ($1. Depreciation Expense—Equipment 15. determine the depreciation for the storage tank for each of the first two years using the sum-of-the-years-digits depreciation method. Question 158 Essay 0 points Modify Remove Question On October 1. (2) The book value of fixed assets should normally increase during the year. Required: (1) Journalize the adjusting entry on December 31 for the impaired goodwill.481) of additional fixed assets.000) = $35.786 2010: 8/36 × ($198. Accumulated Depreciation—Equipment Equipment Loss on Exchange of Fixed Assets Equipment Cash 235.000.000 Add Question Here Question 159 Essay 0 points Modify Remove Question On December 31. determine the depreciation for the tractor for each of the first two years. In addition. A storage tank acquired at the beginning of fiscal year 2010 at a cost of $198. and internal-use software Office furniture and equipment Other fixed assets related to leases Accumulated depreciation and amortization Required: (1) (2) Compute the book value of the fixed assets for the 2010 and 2009 and explain the differences.175 894 $1. $336. Round to the nearest dollar. b. (2) Journalize the adjusting entry to recognize the amortization.125.481 644 $837 Answer (1) A comparison of the book values of the current and preceding years indicates that they increased.000 has an estimated useful life of 20 year.000. Sebastian received a trade-in allowance of $92. and internal-use software Office furniture and equipment Other fixed assets related to leases Less accumulated depreciation Book value $726 595 94 760 $2. $220.000 – $18.000 = $6. journalize the entries to record: (a) the current depreciation of the old equipment to the date of trade-in and (b) the exchange transaction on October 1. Round to the nearest dollar.000 + $7. Bowman Company estimated that goodwill of $80. during periods of economic downturn.000 was impaired. A tractor acquired on January 4 at a cost of $75.000 9. 2012. the end of the preceding fiscal year.000 458. Although additional depreciation expense will reduce the book value. accumulated depreciation on December 31. annual depreciation. 82.500 total patent expense Amortization Expense—Patents Patents Amortized patent rights ($75.000 on the old equipment of a similar type and paid cash of $366. if any. Assuming the exchange has commercial substance. Answer a.000 366.000.500 Add Question Here Question 156 Essay 0 points Modify Remove Question The following information was taken from a recent annual report of Harrison Company: 2010 $726 595 94 760 894 2009 $361 470 81 569 644 Land and buildings Machinery. The following information about the old equipment is obtained from the account in the equipment ledger: Cost. First year: 20/210 × $75. $20. Sebastian Company acquired new equipment with a fair market value of $458.000 – $18.000 Accumulated Depreciation—Equipment 15. using the sum-of-the-years-digits depreciation method. Plant. 1.Required: (1) Determine the patent amortization expense for the current year ended December 31.000/15) + ($90.000 2011: 7/36 × ($198. which was offset by the additional depreciation expense of $250 million ($894 – $644) taken during the current year.000. Would you normally expect the book value of fixed assets to increase or decrease during the year? Property. companies purchase fewer fixed assets.175 – $1. a patent with an estimated useful economic life of 10 years was acquired for $252. equipment.000 Equipment depreciation ($20. . Add Question Here Question 157 Essay 0 points Modify Remove Question The following are two independent situations.500).000. Answer 2. equipment.000) = $40.000 = $7. Assuming that it will have no residual value.000 Add Question Here 2.143 Second year: 19/210 × $75. has an estimated residual value of $18.000.500 82.000 336. Based on this information. most companies invest in new assets in an amount that is at least equal to the depreciation expense. and Equipment (in millions): Current Year Land and buildings Machinery. 1. However. and the book value of their fixed assets may decline.

Cost of razing and removing the old building on property acquired for a building site.000 was added to the building.000 14.552. Cost of repairing vandalism damage to equipment during installation.250. or Neither (N) (a) (b) (c) (d) (e) (f) (g) computer patent oil reserve goodwill U.000 ÷ 25) 36 years ($6.000 was paid in cash. A new mortgage was issued for the cost.000 ($4. Insurance on new equipment while in transit. or Intangible Asset (IA). The related accumulated depreciation account after the depreciation adjustment at the end of the preceding fiscal year is $4. assuming that the repairs were completed at the very beginning of the current year? Round to the nearest dollar. Interest incurred on loan during construction of building. Attorney's fee for title search.700 Add Question Here Question 160 Essay 0 points Modify Remove Question Identify each of the following expenditures as chargeable to (a) Land.000 + $1. 14 2.Building $3. and it has been depreciated by the straight-line method for 25 years. S.000. 7.000/10) × (7/12)] = $14.000 ($6. A major overhaul costing $7. Installing a fence around the parking lot. 12. 20 4.550. (b) Land Improvements. (d) Machinery and Equipment.000.000.700 14. 13.700 Amortized patent rights = [($252. 18.000) 21 years (36 . 16. Special foundation for new equipment acquired.000 are expected to extend the life of a building 10 years beyond the original estimate. (a) (b) (c) (d) (e) (f) $182. The payment was made in cash.550. 19 1.000 1.000 be debited? What is the book value of the building after the extraordinary repairs have been made? What is the expected remaining life of the building after the extraordinary repairs have been made? What is the amount of straight-line depreciation for the current year. Estimated residual value is negligible and has been ignored. or (e) other account. 5. 15 Add Question Here Question 161 Essay 0 points Modify Remove Question Identify the following as a Fixed Asset (FA).000 13.000) Accumulated Depreciation .250. (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Answer Cost of paving parking area for employees and customers.000 . Cost of land fill for building site. Architect's fee for building plans and supervision of construction. Cost of lubricating oil purchased for periodic oil changes for equipment. The original cost of the building was $6. (a) (b) (c) (d) (e) 11.Patents Patents 80.25 + 10) $142.000 80. 3. 6. (c) Buildings.250.952 ($3. Cost incurred in repairing damage resulting from installation of new equipment. Delinquent real estate taxes assumed by purchaser on property acquired for a building site. Insurance during construction of building. Equipment was upgraded to increase its capacity to produce widgets. Special assessment paid to city for extension of water main to property.002. Fee paid for installation of equipment.(2) Journalize the adjusting entry on December 31 for the amortization of the patent rights. 10.000 on a machine increased the useful life by 2 years.552.000 ÷ $182. Treasury note land used for employee parking gold mine FA IA NR N (a) (f) (b) (d) (c) (g) (e) Add Question Here Answer Question 162 Essay 0 points Modify Remove Question A number of major structural repairs completed at the beginning of the current fiscal year at a cost of $1. (a) (b) (c) (d) (e) (f) Answer What has the amount of annual depreciation been in past years? What was the original life estimate of the building? To what account should the $1.000 13.000 7. Freight charges on new equipment.000. 17.000. 9 8. (a) (b) (c) Building Mortgage Payable Equipment Cash Accumulated Depreciation-Machinery 1. Answer (1) Dec 31 Loss from impaired Goodwill Goodwill (2) Dec 31 Amortization Expense . Sales tax on new equipment. Repainting the trim on a building.552. or Natural Resource (NR).002.550.000 ÷ 21) Add Question Here Question 163 Essay 0 points Modify Remove Question Journalize each of the following transactions: (a) (b) (c) Answer A wing costing $1. Parking lot lighting.$4.000 . The upgrade cost of $13.

250 × 6/12 (b) $60.000 = ($500.000 .(80.000 ÷ 5 (b) $30.400 ($360.000 Add Question Here Question 164 Essay 0 points Modify Remove Question XYZ Co.8.) Answer 1st Year (a) $70. b.000 = (500.000 hours) = $25/hr × 2.000) = 350. (a) (b) Answer What is the book value at the end of the fifth year of use? 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 still $8.000.000 after they service their 4 year service life. Replaced a broken window.40) (a) (b) (c) 2nd Year $70.250 $86. Golden Sales managers want to evaluate the options of depreciation.250 hours second year) declining-balance at twice the straight-line rate (Round the answer to the nearest dollar. Replaced the roof that had been on the building 23 years. d.40 (b) Year of acquisition: $22. for the year of acquisition and for the following year. what is the amount of depreciation for the seventh year? (a) (b) $36.000 .000 ÷ 25. Installed window shutters on all windows.000 × 6/12 (c) $14.000 ÷ 14. For those costs identified as capital expenditures. Answer (a) Year of acquisition: $50. Added a warehouse to the back of the building. Capital expenditure.600 hours Add Question Here Question 167 Essay 0 points Modify Remove Question Determine the depreciation.760 ($36.000 .000) ÷ 5 Add Question Here Question 169 Essay 0 points Modify Remove Question Golden Sales has bought $135. with an estimated life of 5 years.40 Add Question Here Question 166 Essay 0 points Modify Remove Question Machinery is purchased on July 1 of the current fiscal year for $240.250 ($360.8.50.15.10.000 × .000 ($360. and a residual value of $10.50) = $120. Compute the depreciation for the last six months of the current fiscal year ending December 31 by each of the following methods: (a) (b) (c) straight-line declining-balance at twice the straight-line rate units-of-production (used for 1. Repainted the interior walls.000 .200 )) $5.000) = ($350.000 × .000 hours) = $25/hr × 1.800 .200 hours first year.000 has been depreciated for 6 years by the straight-line method.000.000) = 350.000 . Replaced the air conditioners with refrigerated air conditioners in the customer service areas.000 . replacement c.200 (c) $144.10.000 × .600 hours during the current year) (Round the answer to the nearest dollar.000 operating hours.50. . and a residual value of $15.125 = ($240. Revenue expenditure d.40) = 200.000 ÷ 5 $56.000 = 72.000) = 225. g.000 ÷ 4 = 56. 2.000 ($360.200 × 6 = 43. Compute the depreciation for the first and second years of use by each of the following methods: (a) (b) (c) straight-line units-of-production (1. e. classify each as an additional or replacement component. Assume a fiscal year ending December 31. replacement e. Revenue expenditure b.000 × .500 = ($500.000 . Serviced all the air conditioners before summer started. f.) Answer (a) $28. It is expected to have a useful life of 4 years.000/10 = 7.400 = ($240. additional Add Question Here Question 165 Essay 0 points Modify Remove Question Equipment purchased at the beginning of the fiscal year for $360.000) = ($350.000 ($360. c.000 ÷ 14.000 = ($500. using (a) the declining-balance method at twice the straightline rate and (b) the straight-line method.10.000 = ($240. of a fixed asset acquired on October 1 for $500.000. Revenue expenditure g. Capital expenditure.00 × 1. Classify each of the costs as a capital expenditure or a revenue expenditure.000) = ($225. The residual value of these assets is estimated at $10.000.144.000) = 450.000 operating hours.000 × 3/12 Following year: $90.800 ($80. (a) Compute the annual straight-line depreciation and the provide the sample depreciation journal entry to be posted at the end of each of the years.000 × .000 with a useful life of 10 years and a residual value of $8.000 . or 25.000 .000 ($360. or 14.000) = 450.000.000.000 . additional f. Answer a.000 hours) = $9.000 ÷ 5) = 90.50. Capital expenditure.15. Assume a fiscal year ending December 31.000 is expected to have a useful life of 5 years.10. Capital expenditure.000 ÷ 5 Add Question Here Question 168 Essay 0 points Modify Remove Question Equipment costing $80.000 .Cash 7. incurred the following costs related to the office building used in operating its sports supply company: a.000 × 3/12) Following year: $180. and residual value of $50.000) = 216.000 in fixed assets on January 1st associated with sales equipment.000 .000) = (450.

Sales Equipment Note: The depreciable value is $10.Sales Equipment 2nd year.150 Add Question Here Question 172 Essay 0 points Modify Remove .000.1.000 $125. (a) Calculate the depreciation expense per hour of operation.250 hours × $14 per hour = $17.875 6.$67.875 16.875-$10.500 Accumulated Depreciation (b) Journal entry for the third year.2.Sales Equipment 31.Sales Equipment Accumulated Depreciation .Sales Equipment 4th year.000 × (6/12) = $17.500 67.000-$67.000 residual value = $6.875 6.000 Divided by service life in years 9 Annual depreciation $35.225 hours × $14 per hour = $17. Dec 31 Depreciation Expense . (c) Calculate the last year’s depreciation expense and provide the journal entry for the last year. Dec 31 Depreciation Expense .500 17.750 16.000 Depreciable amount 315.500) × 50% = $33. (It is also the same for all years other than the first and last year): Dec 31st Depreciation Expense 35.875 third year depreciation 4th year: $135.000 Depreciable amount 315.750-16.000 Accumulated Depreciation (c) Last year depreciation is $35.755 hours × $14 per hour = $38. Journalize the depreciation expense for each year. and 1.000 Less residual value 15.000 10.500 1st year Depreciation Expense Accumulated Depreciation Second year .500 first year depreciation 2nd year: ($135. The equipment has a 9 year life with a residual value of $15.000 4 years $31. (b) Calculate the third year and provide the journal entry for the third year ending December 31st.$135.000 (a) First year depreciation is $35.500 17. Answer (a) Acquisition cost Less residual value Depreciable value Divided by service life Annual depreciation Dec 31 (b) Depreciation Expense Sales Equipment Accumulated Depreciation .500-$33.500 Add Question Here Question 171 Essay 0 points Modify Remove Question On July 1st.000.000 .500 35.250 hours in the first year.150 3rd year Depreciation Expense Accumulated Depreciation 17.500 (January through June) Dec 31st Depreciation Expense Accumulated Depreciation 17.500-$33.755 hours in the second year.250 $135.500 (July through December) Dec 31st Depreciation Expense 17.000 × (6/12) = $17.500 33.570 38.Sales Equipment Accumulated Depreciation .Sales Equipment Accumulated Depreciation . Hartford uses units-of-production method depreciation and the bulldozer is expected to yield 22. Answer (a) Hourly depreciation is: Acquisition cost $330.750 second year depreciation 3rd year: ($135.500 Hourly depreciation $14 (b) First year .(b) Write the journal entries for each year of the service life for these assets with 200% declining balance method. Answer Annual depreciation is: Acquisition cost $330.000.000-$67.250 31. (a) Calculate the depreciation expense and provide the journal entry for the first year ending December 31st. Add Question Here Question 170 Essay 0 points Modify Remove Question On July 1st.000 Service life in hours 22.875 1st year.750) × 50% = $16. Dec 31 Depreciation Expense .570 2nd year Depreciation Expense Accumulated Depreciation Third year .750 33.Sales Equipment Accumulated Depreciation . Hartford Construction purchases a bulldozer for $330. Harding Construction purchases a bulldozer for $330. Harding uses straight-line depreciation.225 hours in the third year of operations.500 operating hours.875 fourth year depreciation 67.000 17. 2.Sales Equipment 3rd year.000.500 38.000 Less residual value 15.250 1st year: Acquisition cost .570 17.150 17. (b) The bulldozer is operated 1. The equipment has a 9 year life with a residual value of $15.000 and this value is taken into account the computation of the final year of depreciation.000 × 50% = $67.1. Dec 31 Depreciation Expense .

000 5.410-75)/4 Straight-line depreciation = $333.50 x (10 /12)] Year 1 Cost 705 Book Value at Beginning of Year 705 Rate 50%* Depreciation for Year 352. is now sold for $60.000. declining-balance method c.000 15.000 cash.) Journalize the following entries: (a) (b) (c) Answer Record the depreciation for the one-half year prior to the sale.000 cash.410 Rate 50%* Depreciation for Year 705 *Rate = (100%/Life) × 2 Rate = (1/4) × 2 Rate = 0.000 237.75 [352. determine the depreciation for the first year by the a.000 80. Straight-line depreciation = (cost-estimated residual value)/ estimated life Straight-line depreciation = (1. 2009 with a cost of $1. Answer Architects’ Fees Construction Labor Engineers’ Fees Insurance costs incurred during construction Interest on money borrowed for construction Building Materials Sales Taxes Cost of Club House $25.000 20.Question Eagle Country Club has acquired a lot to construct a clubhouse.500 copies were made the first year) Answer a.000 Add Question Here Question 173 Essay 0 points Modify Remove Question A copy machine acquired with a cost of $1.75 per year b.000 5. 2009 with a cost of $705 has an estimated useful life of 4 years.000 60.000.000 $25. straight-line method b.10 × 4. Assuming that it will have a residual value of $125.410 has an estimated useful life of 3 years.350 Units-of-production = $0. Assuming that the equipment had been sold for $25.410 Book Value at Beginning of Year 1. Record the sale of the equipment.000 7. prepare the entry for (b) above to record the sale.50 c.000 10.000 37.10 per copy First year depreciation = $450.000 9. (Appropriate entries for depreciation had been made for the first six years of use.000 7.000 6. It is also expected to have a useful operating life of 13.00 ($.000 170. Units-of-production = (cost-residual value) / estimated copies Units-of-production = (1. determine the depreciation for the first and second year by the straight-line method. production method (4. Assuming that it will have a residual value of $75. using the straight-line method.000 80. Answer Straight-line depreciation = (cost-estimated residual value)/ estimated life Straight-line depreciation = (705-75)/3 Straight-line depreciation = $420 per year First year = 350 (420 / 12months * 10) Second year = 420 Add Question Here Question 175 Essay 0 points Modify Remove Question A copy machine acquired on March 1.000 6.000 $375.000 15.50 Add Question Here Question 176 Essay 0 points Modify Remove Question Computer equipment (office equipment) purchased 6 1/2 years ago for $170.410 has an estimated useful life of 4 years. Eagle had the following costs related to the construction: Architects’ Fees Construction Labor Engineers’ Fees Fences around building Grading and leveling Insurance costs incurred during construction Interest on money borrowed for construction Land Building Materials Sales Taxes Trees and Shrubs Determine the cost of the Club House to be reported on the balance sheet. with an estimated life of 8 years and a residual value of $10.000 .500) Add Question Here Question 174 Essay 0 points Modify Remove Question A copy machine acquired on March 1. (a) (b) Depreciation Expense-Office Equipment Accumulated Depreciation-Office Equipment Cash Accumulated Depreciation-Office Equipment Office Equipment Gain on Sale of Fixed Assets 10.000 237.410-75)/13.000 10. Assuming that it will have a residual value of $150. determine the depreciation for the first year by the declining-balance method.350 copies.000 6.000 130.50 *Rate = (100%/Life) × 2 Rate = (1/4) × 2 Rate = 0. Declining Balance Method = $705 Year 1 Cost 1. Answer First year depreciation = $293.

$115.000 126. Price of new.000 12. At the time the patent had been in existence .000 Add Question Here b.000 84.000 and a book value of $42.000 24.000 and on which there is accumulated depreciation of $50. Legal costs incurred to defend the rights that a patent provided were $60.000 130.000 Add Question Here Question 177 Essay 0 points Modify Remove Question Machinery acquired at a cost of $80. trade-in allowance on old.Equip Equipment (old equipment) Debit 42. d.000 Credit 126.000. $34.000. Journalize the disposal of the equipment under the following independent assumptions. $4.000 81. Mineral rights on an ore deposit estimated at 4. The equipment had no market value and was discarded. c.000 126.000 tons of ore were acquired for $2.000 54.000 170. Question 179 Essay 0 points Modify Remove Question Prepare the following journal entries and calculations: (a) (b) (c) A patent that was acquired for $410. (a) Accumulated Depreciation-Machinery Machinery Loss on Disposal of Fixed Assets Machinery Cash Accumulated Depreciation-Machinery Machinery Machinery Cash 50. balance paid in cash.000. a.(c) Cash Accumulated Depreciation-Office Equipment Loss on Disposal of Fixed Assets Office Equipment 25. c.000 115. during which 350.000.000 (including depreciation for the current year to date) is exchanged for similar machinery.000 126.Equip Equipment Cash Accumulated Depreciation .000 18.000 80. For financial reporting purposes. Journal Post Ref Date Description Debit Credit Answer Journal Post Ref Date a.000 84.000.000 111.000 50.000 tons of ore were removed. The equipment is sold for $54.000.000 26. Present the adjusting entry to amortize the patent for the current year. d.000 at the beginning of the current year expires in 15 years and is expected to have value for 4 years. balance paid in cash.000 Add Question Here (b) Question 178 Essay 0 points Modify Remove Question Equipment acquired at a cost of $126. Present the adjusting entry to record depletion for the current year.Equip Loss on Disposal of Fixed Asset Equipment Equipment (new Equipment) Accumulated Depreciation . $115.000. b. The equipment is sold for $24.000 42.000 111.000.000 84.000.000 80.Equip Equipment Gain on Disposal of Fixed Asset Cash Accumulated Depreciation . The list price of the new equipment is $63. trade-in allowance on old. The equipment is traded-in for a similar asset.000 84.000.000.000 15.800. Description Loss on Disposal of Fixed Asset Accumulated Depreciation . present entries to record the disposition of the old machinery and the acquisition of new machinery under each of the following assumptions: (a) (b) Answer Price of new.

000*3/15) 12.000* Credit 600.2 Depletion expense = depletion rate × quantity extracted Depletion expense = .Patents Patents 65.000 Depletion rate = .000 3.000.000 Add Question Here Question 181 Essay 0 points Modify Remove Question On July 1. Journalize the adjusting entry on December 31.000 that has an estimated residual value of $3.000 245.000*2/15) 8.for 5 years.000*1/15) 4. In addition. Determine the depreciation expense for the five years using the sum-of-the-years-digits depreciation method.500 Credit 2.800 Year 3 (63.500 Add Question Here Question 182 Essay 0 points Modify Remove Question On December 31 it was estimated that goodwill of $65.000. The patent has a useful life of 8 years and a legal life of 15 years. Answer (a) Amortization Expense-Patents Patents ($410. a) b) Answer Journalize the adjusting entry on December 31 for the impaired goodwill.000*4/15) 16.500 102. Journal Post Ref Date Description Debit Credit Answer Journal Post Ref Date Dec 31 Description Amortization Expense Patents Debit 2.500.000 on July 1.000 × $.000 Add Question Here Question 183 Essay 0 points Modify Remove Question Computer equipment was acquired at the beginning of the year at a cost of $66.000 ($60.600 Year 4 (63. During the current year.000 3.2 × 3.000 gallons. Journal Post Ref Date Description Debit Credit Answer Journal Post Ref Date Dec 31 Description Depletion Expense Accumulated Depletion Debit 600. Howard Co.000 ÷ 15) Add Question Here 102. 2009 to recognize the depletion expense.000 65.000 was impaired. Journalize the adjusting entry on December 31 for the amortization of the patent rights. Determine the amount to be amortized for the current fiscal year.000 Depletion expense = $600. 2010 to recognize the amortization.70) $4.400 Year 5 (63.500 245.500.500. acquired drilling rights for $7. 3. a) Loss from Impaired Goodwill Goodwill b) Amortization Expense . acquired patents rights for $40.000/37.000 ÷ 4) Depletion Expense Accumulated Depletion (350.000 and an estimated useful life of 5 years.000 gallons were drilled. Answer Year 1 (63.000 Year 2 (63.500.000. a patent with an estimated useful economic life of 10 years was acquired for $60.000.000*5/15) 21.200 Add Question Here . 2010.000 (b) (c) Question 180 Essay 0 points Modify Remove Question Macon Co. Journalize the adjusting entry at December 31. The oil deposit is estimated at 37.000 *Depletion rate = cost / estimated size Depletion rate = 7.

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