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

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Question 61

True/False

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Ordinary repairs and maintenance on long-lived assets are referred to as capital expenditures.

A) True
B) False

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Question 62

Multiple Choice

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How does an asset impairment loss impact a company's financial statements?

A) Raises expenses and lowers both revenue and net income.
B) Lowers assets, stockholders' equity, and net income.
C) Raises expenses and lowers net income with no effect on any other items.
D) Raises liabilities and lowers stockholders' equity.

E) A) and B)
F) A) and C)

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Question 63

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A company purchased a garage from a business with a 7%, 4-year, $75,000 note. The seller's book value for the garage was $42,750. What is the journal entry to record this purchase?

The intangible asset most frequently reported by U.S. businesses is:

Beta Inc. acquired a machine on January 1, 2010 for $40,000. Beta paid $10,000 cash and signed a note for the balance. On January 3, it paid $1,000 freight costs for delivery of the machine. On January 5, Beta paid $2,000 to have the machine installed. On December 30, Beta paid $500 for annual maintenance on the machine. On December 31, Beta recorded depreciation using the straight-line method. Beta expects to use the machine for 10 years at which time it expects a residual value of $3,000. Prepare the journal entry to record depreciation on December 31, 2010.

The fixed asset turnover ratio measures the:

Furniture with a $3,000 sticker price is purchased for $2,500 on account. Which of the following entries would properly record this purchase?

A piece of equipment was acquired on January 1, 2010, at a cost of $22,000, with an estimated residual value of $2,000 and an estimated useful life of four years. The company uses the double-declining-balance method. What is its book value at December 31, 2011?

company A uses an accelerated depreciation method while Company B uses the straight -line method. All other things equal, during the first few years of the asset's use, Company B will show which of the following compared to Company A?

A loss on disposal of an asset is reported:

Residual value is the estimate of the asset's value at the end of its useful life.

Which of the following statements is true?

Accumulated depreciation is classified as a(an)

What is the adjusted balance in the Accumulated Depreciation account at the end of 2012?

T. Powers Company's financial statements on December 31, 2010, showed the following: What is the fixed asset turnover for 2010 (rounded to two decimal places) ?

When S. Dee Company bought B. Darin Company, the purchase price included a patent valued at $15,000. The patent has 10 years remaining of its legal life, but its estimated useful life to S. Dee Company was only 8 years. The journal entry to record the annual patent amortization would include a

A company expects to use equipment that cost $48,000 for ten years and then sell it for $6,000. Using the straight-line method, the company should report depreciation for the equipment of:

A company buys a piece of equipment for $48,000. The equipment has a useful life of ten years. Using the double-declining-balance method, the company's depreciation expense in the first year would be:

If the company sells the machine at the end of 5 years and receives $11,500, the journal entry to record the sale will include which of the following?

At the beginning of 2010, your company buys a $30,000 piece of equipment that it expects to use for 4 years. The company expects to produce a total of 200,000 units. The equipment has an estimated residual value of $2,000. a. Find the depreciable cost. b. Find the depreciation expense per year under the straight-line method. c. Prepare a depreciation schedule under the straight-line method. d. Find the depreciation rate per unit under the units-of-production method. e. Compare the annual depreciation expense using both methods assuming constant annual production. f. Prepare a depreciation schedule under the units-of-production method if, 44,000 units are produced in one year, 53,000 units in year two, 51,000 units in year three, and 52,000 units in year four.