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Exam 9: Long-Term Assets: Fixed and Intangible

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Question 91

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Which of the following is true?

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

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Question 92

Multiple Choice

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

A) cost of paving a parking lot
B) brokerage commission
C) outdoor parking lot lighting attached to the land
D) fences on the land

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Question 93

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The cost of new equipment is called a revenue expenditure because it will help generate revenues in the future.

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 ratio measuring the number of dollars of sales earned per dollar of fixed assets is ​the

Residual value is also known as all of the following except

Xtra Company purchased a business from Argus for $96,000 above the fair value of its net assets.Argus had developed the goodwill over 12 years.How much would Xtra amortize the goodwill for its first year?

A fixed asset's estimated value at the time it is to be retired from service is called

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

The formula for depreciable cost is

As a company records depreciation expense for a period of time,cash is accumulated to replace fixed assets as they wear out.

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 fixed asset with a cost of $52,000 and accumulated depreciation of $47,500 is traded for a similar asset priced at $60,000 (fair market value) in a transaction with commercial substance.Assuming a trade-in allowance of $5,000,at what cost will the new equipment be recorded in the books?

Carter Co.acquired drilling rights for $18,550,000.The oil deposit is estimated at 74,200,000 gallons.During the current year,6,000,000 gallons were drilled.Journalize the adjusting entry at December 31 to recognize the depletion expense. Journal

A characteristic of a fixed asset is that it is

An asset was purchased for $120,000 on January 1,Year 1 and originally estimated to have a useful life of 10 years with a residual value of $10,000.At the beginning of the third year,it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,000.Calculate the third-year depreciation expense using the revised amounts and straight-line method.

Expenditures for research and development are generally recorded as