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Exam 8: Reporting and Analyzing Long-Term Assets

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Question 51

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A company traded an old forklift for a new forklift,receiving a $13,500 trade-in allowance and paying the remaining $47,200 in cash.The old forklift had cost $43,000,a 5-year useful life and a $5,000 salvage value.Straight-line accumulated depreciation of $27,200 had been recorded as of the exchange date. 1.What was the book value of the old forklift on the date of the exchange? 2.What amount of gain or loss (indicate which)should be recognized in recording the exchange,assuming the transaction has commercial substance? 3.What amount should be recorded as the cost of the new forklift?

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1.Asset cost $43,000 Accumulated depreci...

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Question 52

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Intangible assets do not include:

A) Patents.
B) Copyrights.
C) Trademarks.
D) Goodwill.
E) Land held as an investment.

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

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Question 53

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Bering Rock acquires a granite quarry at a cost of $590,000,which is estimated to contain 200,000 tons of granite and is expected to take 6 years to remove.What journal entry would be needed to record the expense for the first year assuming 38,000 tons were removed and sold?

A company purchased a weaving machine for $190,000.The machine has a useful life of 8 years and a residual value of $10,000.It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life.In the first year,15,000 bolts were produced.In the second year,production increased to 19,000 units.Using the units-of-production method,what is the amount of depreciation expense that should be recorded for the second year?

An asset's book value is $18,000 on December 31,Year 5.The asset has been depreciated at an annual rate of $3,000 on the straight-line method.Assuming the asset is sold on December 31,Year 5 for $15,000,the company should record:

How is the cost principle applied to plant asset acquisitions,including lump-sum purchases?

On January 1,a machine costing $260,000 with a 6-year life and an estimated $5,000 salvage value was purchased.It was also estimated that the machine would produce 500,000 units during its life.The actual units produced during its first year of operation were 110,000.Determine the amount of depreciation expense for the first year under each of the following assumptions: 1.The company uses the straight-line method of depreciation. 2.The company uses the units-of-production method of depreciation. 3.The company uses the double-declining-balance method of depreciation.

A company purchased equipment on June 28 of the current year and placed it in service on August 1.The following costs were incurred in acquiring the equipment: Determine the amount to be recorded as cost for the equipment.

In year one,McClintock Co.acquired a truck that cost $75,500 with an estimated $14,000 salvage value and 4 year estimated useful life.Depreciation in the first year was $15,375.McClintock had the following transactions involving plant assets during Year 2.Unless otherwise indicated,all transactions were for cash. Prepare the general journal entries to record these transactions.

Hunter Sailing Company exchanged an old sailboat for a new one.The old sailboat had a cost of $160,000 and accumulated depreciation of $100,000.The new sailboat had an invoice price of $270,000.Hunter received a trade in allowance of $70,000 on the old sailboat,which meant the company paid $200,000 in addition to the old sailboat to acquire the new sailboat.If this transaction has commercial substance,what amount of gain or loss should be recorded on this exchange?

Holding a copyright:

During the current year,Beldon Co.acquired a new computer with a cash price of $12,800 by exchanging an old one on which the company received a $1,500 trade-in allowance (with the balance of $11,300 paid in cash).The old computer cost $9,000 and its accumulated depreciation was $5,500 as of the exchange date.Assuming the exchange transaction had commercial substance,prepare the journal entry to record the exchange.

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000.The machine is depreciated using the straight-line method.The machine's useful life is estimated to be 5 years with a $4,000 salvage value.Depreciation expense in year 2 is:

Depletion is:

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000.The machine's useful life is estimated to be 5 years,or 300,000 units of product,with a $15,000 salvage value.During its first year,the machine produces 64,500 units of product.Determine the machines' first year depreciation under the units-of-production method.

The useful life of a plant asset is:

If land is purchased as a building site,the cost of removing existing structures is not charged to the Land account.

What is depreciation of plant assets? What are the factors necessary in computing depreciation?

The units-of-production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation,except at the beginning and the end of the asset's useful life,when it is the same.