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Exam 9: Long-Term Assets: Fixed and Intangible

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Question 31

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A building with an appraisal value of $154,000 is made available at an offer price of $172,000. The purchaser acquires the property for $40,000 in cash, a 90-day note payable for $45,000, and a mortgage amounting to $75,000. What is the cost basis recorded in the buyer's accounting records to recognize this purchase?

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The cost basis recorded in the...

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Question 32

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On December 31, Strike Company sold one of its batting cages for $50,000. The equipment had an original cost of $310,000 and has accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. What is the amount of the gain or loss on this transaction?

A) gain of $50,000
B) loss of $50,000
C) no gain or loss
D) cannot be determined

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

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Question 33

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The double-declining-balance method is an accelerated depreciation method.

What is the cost of the land, based upon the following data?

When a company discards machinery that is fully depreciated, this transaction would be recorded with the following entry

The formula for depreciable cost is

Minerals removed from the earth are classified as intangible assets.

A copy machine acquired on July 1 with a cost of $1,450 has an estimated useful life of 4 years. Assuming that it will have a residual value of $250, determine the depreciation for the first year by the double-declining-balance method.

When a company exchanges machinery and receives a trade-in allowance greater than the book value, this transaction would be recorded with which of the following entries (assuming the exchange was considered to have commercial substance) ?

Match each account name to the financial statement section (a-i) in which it would appear. -Depreciation Expense A)Current Assets B)Fixed Assets C)Intangible Assets D)Current Liability E)Long-Term Liability F)Owners' Equity G)Revenues H)Operating Expenses I)Other Income/Expense

Classify each of the following as: -Resurfacing a pool in an apartment building A)Ordinary maintenance and repairs B)Asset improvements C)Extraordinary repairs

XYZ Co. incurred the following costs related to the office building used in operating its sports supply company: (a)Replaced a broken window.(b)Replaced the roof that had been on the building 23 years.(c)Serviced all the air conditioners before summer started.(d)Replaced the air conditioners in the customer service areas.(e)Added a warehouse to the back of the building.(f)Repainted the interior walls.(g)Installed window shutters on all windows.​ Classify each of the costs as a capital expenditure or a revenue expenditure.

Classify each of the following costs associated with long-lived assets as one of the following: -Fees paid to architect to design new office building A)Buildings B)Machinery and equipment C)Land D)Land improvements

Assume the following facts related to a land purchase:

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.

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 A)Land improvements B)Buildings C)Land D)Machinery and equipment

In a lease contract, the party who legally owns the asset is the

On July 1, Hartford Construction purchases a bulldozer for $228,000. The equipment has a 9-year life with a residual value of $16,000. Hartford uses the units-of-output method of depreciation, and the bulldozer is expected to yield 26,500 operating hours.(a) Calculate the depreciation expense per hour of operation.(b) The bulldozer is operated 1,250 hours in the first year, 2,755 hours in the second year, and 1,225 hours in the third year of operations. Journalize the depreciation expense for each year.​

Classify each of the following as: -New landscaping A)Ordinary maintenance and repairs B)Asset improvements C)Extraordinary repairs

Equipment acquired at a cost of $126,000 has a book value of $42,000. Journalize the disposal of the equipment under the following independent assumptions.(a)The equipment had no market value and was discarded.(b)The equipment is sold for $54,000.(c)The equipment is sold for $24,000.(d)The equipment is traded-in for a similar asset. The list price of the new equipment is $63,000. The buyer gave no cash in the exchange. The transaction lacks commercial substance.​