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Exam 9: Fixed Assets and Intangible Assets

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Question 1

True/False

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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.

A) True
B) False

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Question 2

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Which of the following is true?

A) If using the straight-line method,the amount of depreciation expense during the first year is higher than that of the double-declining-balance.
B) Regardless of the depreciation method,the amount of total depreciation expense during the life of the asset will be the same.
C) If using the double-declining-balance method,the total amount of depreciation expense during the life of the asset will be the highest.
D) If using the units-of-output method,it is possible to depreciate more than the depreciable cost.

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

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Question 3

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When depreciation estimates are revised,all years of the asset's life are affected.

A copy machine acquired with a cost of $1,410 has an estimated useful life of 4 years.It is also expected to have a useful operating life of 13,350 copies.Assuming that it will have a residual value of $75,determine the depreciation for the first year by the a.straight-line method b.double-declining-balance method c.units-of-output method 4,500 copies were made the first year

When a seller allows a buyer an amount for old equipment that is traded in for new equipment of similar use,this amount is known as boot.

The amount of depreciation expense for a fixed asset costing $95,000,with an estimated residual value of $5,000 and a useful life of 5 years or 20,000 operating hours,is $21,375 by the units-of-output method during a period when the asset was used for 4,500 hours.

The calculation for annual depreciation using the straight-line depreciation method is

The Weber Company purchased a mining site for $1,750,000 on July 1.The company expects to mine ore for the next 10 years and anticipates that a total of 400,000 tons will be recovered.The estimated residual value of the property is $150,000.During the first year,the company extracted 6,500 tons of ore.The depletion expense is

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?

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.

When a company replaces a component of property,plant,and equipment,which statement below does not account for one of the steps in the process?

A characteristic of a fixed asset is that it is

Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of 5 years,or 14,000 operating hours,and a residual value of $10,000.Compute the depreciation for the first and second years of use by each of the following methods: a straight-line b units-of-output 1,200 hours first year; 2,250 hours second year c double-declining-balance

Intangible assets differ from property,plant,and equipment assets in that they lack physical substance.

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?

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:

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

As a company records depreciation expense for a period of time,a corresponding cash inflow from investing activities is reported on the statement of cash flows.

Machinery acquired at a cost of $80,000 and on which there is accumulated depreciation of $55,000 including depreciation for the current year to date is exchanged for similar machinery.Assume that the transaction has commercial substance.For financial reporting purposes,present entries to record the exchange of the machinery under each of the following assumptions: a Price of new,$120,000; trade-in allowance on old,$4,000; balance paid in cash. b Price of new,$120,000; trade-in allowance on old,$34,000; balance paid in cash.

When a plant asset is traded for another similar asset,losses on the asset traded are not recognized.