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Exam 10: Long-Term Assets: Fixed and Intangible

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Question 31

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

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Question 32

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Classify each of the following as: -Installing a new air conditioning system in an old building

A) Ordinary maintenance and repairs
B) Asset improvements
C) Extraordinary repairs

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Question 33

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

A tangible asset is one that lacks physical existence.

Which of the following is included in the cost of land?

On the first day of the fiscal year,a new walk-in cooler with a list price of $58,000 was acquired in exchange for an old cooler and $44,000 cash.The old cooler had a cost of $25,000 and accumulated depreciation of $16,000.Assume the transaction has commercial substance.

Classify each of the following costs associated with long-lived assets as one of the following: -Purchase price of land purchased for new business site

Equipment acquired on January 2,Year 1,at a cost of $525,000 has an estimated useful life of eight years and an estimated residual value of $45,000.Required

Eagle Country Club has acquired a lot to construct a clubhouse.Eagle had the following costs related to the construction:​ Determine the cost of the club house to be reported on the balance sheet.

When selling a piece of equipment for cash,a loss will result when the proceeds of the sale are less than the book value of the asset.

Expenditures that add to the utility of fixed assets for more than one accounting period are

Classify each of the following costs associated with long-lived assets as one of the following: -Supplies (materials) used to test new equipment

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.

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.

On October 1,Sebastian Company acquired new equipment with a fair market value of $458,000.Sebastian received a trade-in allowance of $92,000 on the old equipment of a similar type and paid cash of $366,000.The following information about the old equipment is obtained from the account in the equipment ledger: Cost,$336,000; accumulated depreciation on December 31,the end of the preceding fiscal year,$220,000; annual depreciation,$20,000.Assuming the exchange has commercial substance,journalize the entries to record: (a)the current depreciation of the old equipment to the date of trade-in and (b)the exchange transaction on October 1.

The cost of a patent with a remaining legal life of 10 years and an estimated useful life of seven years is amortized over 10 years.

A capital expenditure results in a debit to a (n)

Which of the following is included in the cost of constructing a building?

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?

All of the following are needed for the calculation of straight-line depreciation except