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Exam 9: Long-Term Assets: Fixed and Intangible

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Question 71

Multiple Choice

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Residual value is also known as all of the following except

A) scrap value
B) trade-in value
C) salvage value
D) net book value

E) None of the above
F) B) and C)

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Question 72

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Golden Sales has bought $135,000 in fixed assets on January 1st associated with sales equipment. The residual value of these assets is estimated at $10,000 at the end of their 4-year service life. Golden Sales managers want to evaluate the options of depreciation. ​ (a) Compute the annual straight-line depreciation and provide the sample depreciation journal entry to be posted at the end of each of the years. (b) Write the journal entries for each year of the service life for these assets using the double-declining balance method.

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(a) _TB2281_00 ​ _TB2281_00 ​ ...

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Question 73

Multiple Choice

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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?

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

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.

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

On December 31, Strike Company sold one of its batting cages for $55,000. The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000. Depreciation has been taken up to the end of the year. What is the amount of the gain or loss on this transaction?

Losses on the discarding of fixed assets are reported in the income statement.

A characteristic of a fixed asset is that it is

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

A copy machine acquired on July 1 with a cost of $1,450 has an estimated useful life of 4 years. Assuming that it will have a residual value of $250, determine the depreciation for the first year by the double-declining-balance method.

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.

On June 1, 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, which ends on December 31. Using straight-line depreciation, calculate depreciation expense for the final (partial) year of service.

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.

Classify each of the following costs associated with long-lived assets as one of the following:

A capital expenditure results in a debit to

Amortization Expense

The proper journal entry to purchase a computer costing $975 on account to be utilized within the business would be

What is the cost of the land, based upon the following data? $\begin{array}{lr}\text { Land purchase price } & \$ 178,000 \\\text { Broker's commission } & 15,000 \\\text { Payment for the demolition } & \\\text { and removal of existing building } & 5,000\\\text { Cash received from the sale of materials }\\\text { salvaged from the demolished building }&2,000\end{array}$

An intangible asset is one that has a physical existence.