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Exam 9: Fixed Assets and Intangible Assets

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Question 51

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If a fixed asset, such as a computer, were purchased on January 1st for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is: (Note: EOM indicates the last day of each month.)

A) EOM Depreciation Expense 100 Accumulated Depreciation 100
B) EOM Depreciation Expense 1,200 Accumulated Depreciation 1,200
C) EOM Accumulated Depreciation 1,200 Depreciation Expense 1,200
D) EOM Accumulated Depreciation 100 Depreciation Expense 100

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Question 52

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

A) debit Accumulated Depreciation; credit Machinery
B) debit Machinery; credit Accumulated Depreciation
C) debit Cash; credit Accumulated Depreciation
D) debit Depreciation Expense; credit Accumulated Depreciation

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Question 53

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On the first day of the fiscal year, a new walk-in cooler with a list price of $52,000 was acquired in exchange for an old cooler and $42,000 cash. The old cooler had a cost $24,000 and accumulated depreciation of $17,000. a)Determine the gain to be recorded on the exchange. b)Joumalize the entry to recort the exchange.

Residual value is also known as all of the following except

The Weber Company purchased a mining site for $500,000 on July 1, 2011. The company expects to mine ore for the next 10 years and anticipates that a total of 100,000 tons will be recovered. The estimated residual value of the property is $80,000. During 2011 the company extracted 4,000 tons of ore. The depletion expense for 2011 is

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

Land acquired as a speculation is reported under Investments on the balance sheet.

When a company exchanges machinery and receives a trade-in allowance greater than the book value, this transaction would be recorded with the following entry (assuming the exchange was considered to have commercial substance) :

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

Machinery acquired at a cost of $80,000 and on which there is accumulated depreciation of $50,000 (including depreciation for the current year to date) is exchanged for similar machinery. For financial reporting purposes, present entries to record the disposition of the old machinery and the acquisition of new machinery under each of the following assumptions:

The accumulated depletion account is

Which of the following below is an example of a capital expenditure?

Long lived assets held for sale are classified as fixed assets.

On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $55,000. What is the amount of the gain or loss on this transaction?

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 in a transaction with commercial substance. Assuming a trade-in allowance of $5,000, the cost basis of the new asset is

Copy equipment was acquired at the beginning of the year at a cost of $56,000 that has an estimated residual value of $8,000 and an estimated useful life of 5 years. It is estimated that the machine has an estimated 1,000,000 copies. This year 240,000 copies were made. Determine the (a) depreciable cost, (b) depreciation rate, and (c) the units-of-production depreciation for the year.

An operating lease is accounted for as if the lessee has purchased the asset.

When exchanging equipment, if the trade-in allowance is greater than the book value a loss results.

The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called

Minerals removed from the earth are classified as intangible assets.