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Exam 9: Fixed Assets and Intangible Assets

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Question 61

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A machine costing $57,000 with a 6-year life and $54,000 depreciable cost was purchased January 1.Compute the yearly depreciation expense using straight-line depreciation.

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$54,000 ÷ ...

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Question 62

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Chasteen Company acquired mineral rights for $9,100,000.The mineral deposit is estimated at 65,000,000 tons.During the current year,18,375,000 tons were mined and sold. Required: 1 Determine the amount of depletion expense for the current year. 2 Journalize the adjusting entry to recognize the depletion expense.

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1 $9,100,000/65,000,000 tons ...

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Question 63

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Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended.

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

The depreciation method that does not use residual value in calculating the first year's depreciation expense is

An exchange is said to have commercial substance if future cash flows remain the same as a result of the exchange.

Convert each of the following estimates of useful life to a straight-line depreciation rate,stated as a percentage. 1. 2 years 2. 8 years 3. 10 years 4. 20 years 5. 25 years 6. 40 years 7. 50 years

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

A new machine with a purchase price of $109,000,with transportation costs of $12,000,installation costs of $5,000,and special acquisition fees of $6,000,would have a cost basis of

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.The cost basis recorded in the buyer's accounting records to recognize this purchase is

The journal entry for recording payment for the short-term lease of a fixed asset would

Prior to adjustment at the end of the year,the balance in Trucks is $300,900 and the balance in Accumulated Depreciation-Trucks is $88,200.Details of the subsidiary ledger are as follows: $\begin{array}{|l|r|r|r|r|r|}\hline \begin{array}{l}\text { Truck } \\\text { No. }\end{array} & {\text { Cost }} & \begin{array}{l}\text { Estimated } \\\text { Residual Value }\end{array} & \begin{array}{l}\text { Estimated } \\\text { Useful Life }\end{array} & \begin{array}{l}\text { Accumulated } \\\text { Depreciation at } \\\text { Beginning of Year }\end{array} & \begin{array}{l}\text { Miles } \\\text { Operated } \\\text { During Year }\end{array} \\\hline 1 & \$ 100,000 & \$ 13,000 & 300,000 & - & 30,000 \\\hline 2 & 72,900 & 9,900 & 300,000 & \$ 60,000 & 25,000 \\\hline 3 & 38,000 & 3,000 & 200,000 & 8,050 & 45,000 \\\hline 4 & 90,000 & 13,000 & 200,000 & 20,150 & 40,000 \\\hline\end{array}$ Required: 1 Based on the units-of-output method,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. 2 Journalize the entry to record depreciation for the year.

The following information was taken from a recent annual report of Harrison Company in millions: $\begin{array}{|l|r|r|}\hline & \text { Current Year } & \text { Preceding Year } \\\hline \text { Land and buildings } & \$ 726 & \$ 361 \\\hline \text { Machinery, equipment, and internal-use software } & 595 & 470 \\\hline \text { Office furniture and equipment } & 94 & 81 \\\hline \text { Other fixed assets related to leases } & 760 & 569 \\\hline \text { Accumulated depreciation and amortization } & 894 & 644 \\\hline\end{array}$ Required: 1 Compute the book value of the fixed assets for the current year and the preceding year and explain the differences,if any. 2 Would you normally expect the book value of fixed assets to increase or decrease during the year?

Fixed assets are ordinarily presented on the balance sheet

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

Expected useful life is

Identify the following as a fixed asset FA,or intangible asset IA,natural resource NR,or none of theseN a. computer b. patent c .oil reserve d. goodwill e. U.S.Treasury note f. land used for employee parking g. gold mine

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.

The accumulated depletion of a natural resource is reported on the

The higher the fixed asset turnover,the