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Exam 9: Fixed Assets and Intangible Assets

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Question 101

Multiple Choice

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Accumulated Depreciation

A) is the same as Depreciation Expense
B) is used to show the amount of cost expiration of intangibles
C) is a contra asset account
D) is used to show the amount of cost expiration of natural resources

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

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Question 102

Multiple Choice

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The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is

A) allocation
B) depreciation
C) amortization
D) depletion

E) C) and D)
F) All of the above

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Question 103

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The cost of replacing an engine in a truck is an example of ordinary maintenance.

Classify each of the following costs associated with long-lived assets as one of the following: -Cost of installing new equipment

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.

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

When a company sells machinery at a price equal to its book value, this transaction would be recorded with an entry that would include the following:

Xtra Company purchased a business from Argus for $96,000 above the fair value of its net assets. Argus had developed the goodwill over 12 years. How much would Xtra amortize the goodwill for its first year?

The Bacon Company acquired new machinery with a price of $15,200 by trading in similar old machinery and paying $12,700. The old machinery originally cost $9,000 and had accumulated depreciation of $5,000. In recording this transaction, Bacon Company should record

Classify each of the following as: -Fixing damage due to a car accident

Match each account name to the financial statement section a-i) in which it would appear. -Research and Development Costs

Which of the following is included in the cost of land?

On July 1, Andrew Company purchased equipment at a cost of $150,000 that has a depreciable cost of $120,000 and an estimated useful life of 3 years or 60,000 hours. Using straight-line depreciation, prepare the journal entry to record depreciation expense for a) the first year, b) the second year, and c) the last year.

Revising depreciation estimates affects the amounts of depreciation expense recorded in past periods.

Expected useful life is

Computer equipment was acquired at the beginning of the year at a cost of $63,000 that has an estimated residual value of $3,000 and an estimated useful life of 5 years. Determine the a) depreciable cost b) double-declining-balance rate, and c) double-declining-balance depreciation for the first year.

Computer equipment was acquired at the beginning of the year at a cost of $65,000 that has an estimated residual value of $3,800 and an estimated useful life of 8 years. Determine the a) depreciable cost, b) straight-line rate, and c) annual straight-line depreciation.

Classify each of the following costs associated with long-lived assets as one of the following: -Cost of removing an existing building to ready land for use as a new business site

Comment on the validity of the following statements. "As an asset loses its ability to provide services, cash needs to be set aside to replace it. Depreciation accomplishes this goal."

Expenditures that add to the utility of fixed assets for more than one accounting period are