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Exam 10: Long-Term Assets: Fixed and Intangible

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Question 31

True/False

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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.

A) True
B) False

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Question 32

Multiple Choice

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

A) insurance costs during construction
B) cost of paving the parking lot
C) cost of repairing vandalism damage during construction
D) cost of removing the demolished building existing on the land when it was purchased

E) All of the above
F) A) and B)

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Question 33

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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?

On December 31, Strike Company has decided to discard one of its batting cages. The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. Which of the following will be included in the entry to record the disposal?

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

When depreciation estimates are revised, all years of the asset's life are affected.

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

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

Capital expenditures are costs that improve a fixed asset or extend its useful life.

The following information was taken from a recent annual report of Harrison Company (in millions):? $\begin{array} { | l | r | r | } \hline \text { Land and buildings } & \text { Current Year } & \text { Preceding Year } \\\hline \text { Machinery, equipment, and internal-use software } & \$ 726 & \$ 361 \\\hline \text { Office furniture and equipment } & 595 & 470 \\\hline \text { Other fixed assets related to leases } & 94 & 81 \\\hline \text { Accumulated depreciation and amortization } & 760 & 569 \\\hline\end{array}$ Required (a)Compute the book value of the fixed assets for the current year and the preceding year and explain the differences, if any. (b)Would you normally expect the book value of fixed assets to increase or decrease during the year?

Match each account name to the financial statement section (a-i) in which it would appear. -Accumulated Depreciation-Buildings

Classify each of the following as: -Paving a new parking lot

A machine with a cost of $75,000 has an estimated residual value of $5,000 and an estimated life of four years or 18,000 hours. What is the amount of depreciation for the second full year, using the double-declining-balance method?

A used machine with a purchase price of $77,000, requiring an overhaul costing $8,000, installation costs of $5,000, and special acquisition fees of $3,000, would have a cost basis of

A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 is sold for $3,500. What is the amount of the gain or loss on disposal of the fixed asset?

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

Equipment acquired at a cost of $126,000 has a book value of $42,000. Journalize the disposal of the equipment under the following independent assumptions. (a)The equipment had no market value and was discarded. (b)The equipment is sold for $54,000. (c)The equipment is sold for $24,000. (d)The equipment is traded in for a similar asset. The list price of the new equipment is $63,000. The buyer gave no cash in the exchange. The transaction lacks commercial substance.​Journal

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

When a plant asset is traded for another similar asset, losses on the asset traded are not recognized.

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