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Exam 9: Fixed Assets and Intangible Assets

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Question 21

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Regardless of the depreciation method,the amount that will be depreciated during the life of the asset will be the same.

A) True
B) False

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Question 22

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A machine with a cost of $75,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours.What is the amount of depreciation for the second full year,using the double declining-balance method?

A) $17,500
B) $37,500
C) $18,750
D) $16,667

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

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Question 23

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The book value of a fixed asset reported on the balance sheet represents its market value on that date.

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.

When the amount of use of a fixed asset varies from year to year,the method of determining depreciation expense that best matches allocation of cost with revenue is

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

A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 is sold for $3,500.What is the amount of the gain or loss on disposal of the fixed asset?

The cost of new equipment is called a revenue expenditure because it will help generate revenues in the future.

On June 1,2014,Aaron Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years and 30,000 hours. Using straight line depreciation,calculate depreciation expense for the first year.

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

Machinery is purchased on July 1 of the current fiscal year for $240,000.It is expected to have a useful life of 4 years,or 25,000 operating hours,and a residual value of $15,000.Compute the depreciation for the last six months of the current fiscal year ending December 31 by each of the following methods: (Round the answer to the nearest dollar. )

Capital expenditures are costs that are charged to Stockholders' Equity accounts.

A capital lease is accounted for as if the asset has been purchased.

On July 1,2010,Howard Co.acquired patents rights for $40,000.The patent has a useful life of 8 years and a legal life of 15 years.Journalize the adjusting entry on December 31,2010 to recognize the amortization. Journal

Determine the depreciation,for the year of acquisition and for the following year,of a fixed asset acquired on October 1 for $500,000,with an estimated life of 5 years,and residual value of $50,000,using (a)the declining-balance method at twice the straight-line rate and (b)the straight-line method.Assume a fiscal year ending December 31.

A capital expenditure results in a debit to

When a property,plant,and equipment asset is sold for cash,any gain or loss on the asset sold should be recorded.

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

The amount of the depreciation expense for the second full year of use of a fixed asset costing $100,000,with an estimated residual value of $5,000 and a useful life of 4 years,is $25,000 by the declining-balance method at twice the straight-line rate.

On December 31,Strike Company has decided to trade-in one of its batting cages for another one that has a cost of $500,000.The seller of the batting cage is willing to allow a trade-in amount of $11,000.The initial cost of the old equipment was $215,000 with an accumulated depreciation of $185,000.Depreciation has been taken up to the end of the year.The difference will be paid in cash.What is the amount of the gain or loss on this transaction?