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Exam 9: Long-Term Assets: Fixed and Intangible

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Question 61

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Copy equipment was acquired at the beginning of the year at a cost of $72,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years.It is estimated that the machine will output an estimated 1,000,000 copies.This year,315,000 copies were made.Determine the (a)depreciable cost,(b)depreciation rate,and (c)the units-of-output depreciation for the year.

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Question 62

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It is necessary for a company to use the same depreciation method for all of its depreciable assets.

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Question 63

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The transfer to expense of the cost of intangible assets attributed to the passage of time or decline in usefulness is called amortization.

A capital expenditure results in a debit to

An intangible asset is one that has a physical existence.

Capital expenditures are costs that are charged to stockholders' equity accounts.

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

Fill in the missing numbers using the formula for fixed asset turnover:

Fixed assets are ordinarily presented on the balance sheet

The normal balance of the accumulated depreciation account is a debit.

Expenditures that increase operating efficiency or capacity for the remaining useful life of a fixed asset are called capital expenditures.

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

Long-lived assets that are intangible in nature,used in the operations of the business,and not held for sale in the ordinary course of business are called fixed assets.

When a company establishes an outstanding reputation and has a competitive advantage because of it,the company should record goodwill on its financial statements.

Financial statement data for the years ended December 31 for Parker Corporation are as follows: ​ ​ (a)Determine the fixed asset turnover for the current and prior years. (b)Does the change in fixed asset turnover from the prior year to the current year indicate a favorable or unfavorable trend?

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.

On December 31,Strike Company traded in one of its batting cages for another one that has a cost of $500,000.Strike receives a trade-in allowance of $11,000.The old equipment had an initial cost of $215,000 and has accumulated depreciation of $185,000.Depreciation has been recorded 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?

The double-declining balance rate for calculating depreciation expense is determined by doubling the straight-line rate.Assuming that an asset has a useful life of 25 years,determine the rate to be used if using the double-declining-balance method.

Equipment with a cost of $160,000,an estimated residual value of $40,000,and an estimated life of 15 years was depreciated by the straight-line method for 4 years.Due to obsolescence,it was determined that the remaining useful life should be shortened by 3 years and the residual value changed to zero.The depreciation expense for the current and future years is

The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is the