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Exam 9: Long-Lived Tangible and Intangible Assets

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Question 1

Multiple Choice

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The company has net sales revenue of $3.6 million during 2018.The company's records also included the following information: What is the company's fixed asset turnover ratio for 2018?

A) 18.00
B) 1.33
C) 1.00
D) 1.50

E) None of the above
F) A) and D)

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Question 2

Multiple Choice

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Match each term with the appropriate definition.Not all definitions will be used. -Licensing right

A) Net sales revenue divided by average net fixed assets.
B) Costs that are expensed in the period incurred.
C) A contractual agreement that allows limited permission for use of a property.
D) Net income divided by average total assets.
E) An estimate of how long a tangible asset will last before it physically wears out.
F) Asset cost minus residual value.
G) Costs that are recorded as revenues.
H) An estimate of how long a company will use a particular asset.
I) Allocating the cost of tangible assets over their limited useful life.
J) A cumulative record of depreciation expense,accumulated depreciation and book value.
K) Asset cost minus accumulated depreciation.
L) Grants the exclusive right to sell or use a creative work.
M) The method whereby different parts of an asset may be depreciated over different useful lives under IFRS.
N) The principle that companies wish to pay the lowest possible tax at the last possible time.
O) Allocating the cost of intangible assets over their limited useful life.

P) F) and G)
Q) E) and J)

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Question 3

Multiple Choice

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Morris Lest,Inc.sold its truck and received less cash than the truck's book value.The net effect of this sale on the accounting equation is a(n) :

The fixed asset turnover ratio measures the:

On December 31,2018,Far Niente Winery sold a wine press for $545,000;the wine press had originally cost $900,000.Cash was paid by the buyer of the press.Accumulated Depreciation on the press,updated to the date of disposal,was $450,000. What is the effect of the sale on the balance sheet and income statement of Far Niente reported as of and for the year ended December 31,2018?

Match each term with the appropriate explanation.Not all explanations will be used. -Carrying value

MacKenzie Manufacturing purchased equipment for $160,000.In addition,shipping charges of $2,000 were incurred to obtain the equipment.The company paid $12,500 to construct a foundation and install the equipment.The equipment is estimated to have a residual value of $15,000 at the end of its 5-year useful life. Using the straight-line method,what is the amount of depreciation expense each year?

If a company wants exclusive rights to artistic material,it should obtain:

Which of McGraw-Hill's intangible assets gives it the legal right to prevent you from borrowing a textbook from a friend and photocopying several chapters from the book?

Company A uses an accelerated depreciation method while Company B uses the straight-line method for an asset of the same cost and useful life.Other things being equal,which of the following is correct?

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

Match each term with the appropriate definition.Not all definitions will be used. -Fixed asset turnover ratio

If Company A has a contractual right to sell certain products or services,use certain trademarks,or perform activities in a certain geographical regions,then Company A has:

What is the effect of an impairment loss on the accounting equation?

The carrying value of a long-lived asset is referred to as its:

Tidy Limited purchased a new van on January 1,2018.The van cost $20,000.It has an estimated life of five years and the estimated residual value is $5,000.Tidy uses the double-declining-balance method to compute depreciation. What is the depreciation expense for 2018?

An asset's book value or carrying value is its:

Accumulated Depreciation:

Sierra Nevada Corp.reported Sales Revenue of $500,000,000 and Sales Discounts of $4,000,000 for the year.The beginning balance of Net Plant and Equipment was $23,000,000,and the ending balance was $27,000,000.What is the fixed asset turnover ratio?

On January 1,2018,Orangewood Industries bought a new cash register for $7,500.Orangewood plans to use the cash register for 4 years and then sell it for $600.If Orangewood uses straight-line depreciation,depreciation expense for the year ended December 31,2018 equals: