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Exam 9: Fixed Assets and Intangible Assets

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Question 31

Multiple Choice

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

A) straight-line
B) units-of-production
C) double-declining-balance
D) none of the above

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

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Question 32

True/False

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When selling a piece of equipment for cash,a loss will result when the proceeds of the sale are less than the book value of the asset.

A) True
B) False

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Question 33

Multiple Choice

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The calculation for annual depreciation using the units-of-production method is

Patents are exclusive rights to manufacture,use,or sell a particular product or process.

The Weber Company purchased a mining site for $1,750,000 on July 1,2014.The company expects to mine ore for the next 10 years and anticipates that a total of 400,000 tons will be recovered.The estimated residual value of the property is $150,000.During 2014 the company extracted 6,500 tons of ore.The depletion expense for 2014 is

An exchange is said to have commercial substance if future cash flows remain the same as a result of the exchange.

When a company sells machinery at a price equal to its book value,this transaction would be recorded with an entry that would include the following:

The accumulated depletion account is

A copy machine acquired on March 1,2011 with a cost of $1,410 has an estimated useful life of 3 years.Assuming that it will have a residual value of $150,determine the depreciation for the first and second year by the straight-line method.

Accumulated Depreciation

The most widely used depreciation method is

Solare Company acquired mineral rights for $60,000,000.The diamond deposit is estimated at 6,000,000 tons.During the current year,2,300,000 tons were mined and sold.

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

Expected useful life is

A double-declining balance rate for calculating depreciation expense is determined by doubling the straight-line rate.Assuming that an asset has a useful life of 25 years,determine the rate to be used if using the double-declining balance method.

Computer equipment (office equipment)purchased 6 1/2 years ago for $170,000,with an estimated life of 8 years and a residual value of $10,000,is now sold for $60,000 cash.(Appropriate entries for depreciation had been made for the first six years of use. )Journalize the following entries:

Journalize each of the following transactions:

All leases are classified as either

In a lease contract,the party who legally owns the asset is the

Computer equipment was acquired at the beginning of the year at a cost of $65,000 that has an estimated residual value of $3,800 and an estimated useful life of 8 years.Determine the (a) depreciable cost, (b) straight-line rate,and (c) annual straight-line depreciation.