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Exam 9: Reporting and Interpreting Long-Lived Tangible and Intangible Assets

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Question 51

Multiple Choice

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What is the journal entry to record the disposal of the asset?

A) Debit Cash and credit Gain on Disposal for $95,000
B) Debit Cash for $450,000, debit Accumulated Depreciation for $545,000, credit Gain on Disposal for $95,000, and credit Equipment for $900,000
C) Debit Cash and credit Equipment for $545,000
D) Debit Cash for $545,000, debit Accumulated Depreciation for $260,000, debit Loss on Disposal for $95,000, and credit Equipment for $900,000

E) B) and D)
F) C) and D)

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Question 52

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Companies within the same industry do not always use the same depreciation method,but will use the same expected useful life for the same piece of equipment.

A) True
B) False

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Question 53

Multiple Choice

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Your company has net sales revenue of $36 million during the year.At the beginning of the year,fixed assets are $8 million.At the end of the year,fixed assets are $10 million.What is the fixed asset turnover ratio?

Which of the following statements about asset impairment is correct?

A category of long-lived assets that are depleted over time is:

Which of the following is not a characteristic of tangible long-lived assets?

At the beginning of 2015,your company buys a $30,000 piece of equipment that it expects to use for 4 years.The equipment has an estimated residual value of $2,000.The company expects to produce a total of 200,000 units.Actual production is as follows: 44,000 units in 2015,53,000 units in 2016,51,000 units in 2017,and 52,000 units in 2018. Required: Part a.Determine the depreciable cost. Part b.Calculate the depreciation expense per year under the straight-line method. Part c.Use the straight-line method to prepare a depreciation schedule (that shows the Depreciation Expense,Accumulated Depreciation,and Net Book Value by year). Part d.Calculate the depreciation rate per unit under the units-of-production method. Part e.Use the units-of-production method to prepare a depreciation schedule (that shows the Depreciation Expense,Accumulated Depreciation,and Net Book Value by year).

On January 1,2017,Busy Beaver bought a new industrial lathe for $210,000.It expects to use the lathe for 10,000 hours over the next 5 years and then sell it for $10,000.Busy Beaver used the lathe for 2,000 hours in 2017 and 2,500 hours in 2018.Accumulated Depreciation at December 31,2018,using units-of-production,equals:

A company began the year with Property and Equipment costing $680,000 and accumulated depreciation of $120,000.The only change affecting the long-lived assets account during the year is the $55,000 of depreciation expense that must be recorded for the year.What is the amount of Property and Equipment,net,to be reported on the balance sheet at the end of the year?

On January 1,2017,Whittle,Inc.purchased timber rights for $1,500,000,which are expected to produce a total of 2,000,000 cords of wood over 4 years.The cords of wood cut were 200,000 in 2017 and 280,000 in 2018.Depletion for 2017 equals:

Once the depreciation expense for a long-lived asset is calculated:

At the end of the first year of an asset's life,the declining-balance depreciation:

Universal Corp.sold a used piece of machinery for $11,000 that it had purchased for $15,000.At the time of the sale,accumulated depreciation relating to the machinery was $6,000.As a result of this sale:

Which of the following would be properly classified as a long-lived asset?

Assuming no additions,replacements,or extraordinary repairs,the book value of a long-lived asset declines over time.

The straight-line depreciation method and the double-declining-balance depreciation method:

A company acquired property that included land,building and equipment for a total cost of $163,000.The land was appraised at $87,500,the building at $35,000,and the equipment at $52,500.What should be the allocation of the total cost in the accounting records?

Assuming nothing else changes,a decrease in average net fixed assets will cause the fixed asset turnover ratio to increase.

Xit Company bought a new delivery truck.The manufacturer says that the truck should last for ten years and 120,000 miles.Xit plans to use the truck for 4 years,during which it will be driven 50,000 miles.What is the useful life of the truck for straight-line depreciation purposes?

A company made the following expenditures in connection with the construction of its new building: Required: Prepare a schedule showing the amounts to be recorded as land,buildings,and machinery.