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Exam 10: Long-Term Assets: Fixed and Intangible

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Question 61

Multiple Choice

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The accumulated depletion account is

A) an expense account
B) an intangible asset account
C) reported on the income statement as other expense
D) reported on the balance sheet as a deduction from the cost of the mineral deposit

E) B) and D)
F) A) and B)

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Question 62

Multiple Choice

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When a company exchanges machinery and receives a trade-in allowance greater than the book value, this transaction would be recorded with which of the following entries (assuming the exchange was considered to have commercial substance) ?

A) debit Machinery and Accumulated Depreciation; credit Machinery, Cash, and Gain on Exchange of Machinery
B) debit Machinery and Accumulated Depreciation; credit Machinery and Cash
C) debit Cash and Machinery; credit Accumulated Depreciation
D) debit Cash and Machinery; credit Accumulated Depreciation and Machinery

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

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Question 63

Multiple Choice

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Classify each of the following costs associated with long-lived assets as one of the following: -Freight costs paid on purchase of new equipment

Classify each of the following costs associated with long-lived assets as one of the following: -Modifying a building purchased for new business location

During construction of a building, the cost of interest on a construction loan should be charged to an expense account.

Match the intangible assets described with their proper classification (a-d) . ​ -iTunes music

When a company discards machinery that is fully depreciated, this transaction would be recorded as a

The accumulated depletion of a natural resource is reported on the

On June 1, Scotter Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of three years or 30,000 hours.​Using straight-line depreciation, calculate depreciation expense for the first year, which ends on December 31.

Classify each of the following costs associated with long-lived assets as one of the following: -Cost of removing an existing building to ready land for use as a new business site

Land acquired so it can be resold in the future is listed on the balance sheet as a (n)

Expenditures for research and development are generally recorded as

Sands Company purchased mining rights for $500,000. It expects to harvest 1 million tons of ore over the next five years. During the current year, Sands mined 350,000 tons of ore. The entry to record the depletion would include a

Classify each of the following costs associated with long-lived assets as one of the following: -Cost of insurance during the construction of new office building

When old equipment is traded in for a new equipment, the difference between the list price and the trade-in allowance is called boot.

On the first day of the fiscal year, a new walk-in cooler with a list price of $58,000 was acquired in exchange for an old cooler and $44,000 cash. The old cooler had a cost of $25,000 and accumulated depreciation of $16,000.Assume the transaction has commercial substance. (a)Determine the gain to be recorded on the exchange. (b)Journalize the entry to record the exchange.

A fixed asset with a cost of $41,000 and accumulated depreciation of $36,500 is traded for a similar asset priced at $60,000. Assuming a trade-in allowance of $3,000, the recognized loss on the trade is

As a company records depreciation expense for a period of time, cash is accumulated to replace fixed assets as they wear out.

Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of five years, or 14,000 operating hours, and a residual value of $10,000. Compute the depreciation for the first and second years of use by each of the following methods: (a)Straight-line (b)Units-of-activity (1,200 hours first year; 2,250 hours second year) (c)Double-declining-balance​

The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called