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Exam 9: Fixed Assets and Intangible Assets

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Question 81

True/False

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Assets may be grouped according to common traits and depreciated by using a single composite rate.

A) True
B) False

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Question 82

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On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $310,000 with an accumulated depreciation of $260,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $50,000. What is the amount of the gain or loss on this transaction?

A) Gain of $50,000
B) Loss of $50,000
C) No gain or loss
D) Cannot be determined

E) B) and C)
F) None of the above

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Question 83

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XYZ Co. incurred the following costs related to the office building used in operating its sports supply company: Classify each of the costs as a capital expenditure or a revenue expenditure. For those costs identified as capital expenditures, classify each as an additional or replacement component.

The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is

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

Which of the following below is an example of a capital expenditure?

To a major resort, timeshare properties would be classified as property, plant and equipment.

Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended.

Regardless of the depreciation method, the amount that will be depreciated during the life of the asset will be the same.

The entry to record the disposal of fixed assets will include a credit to accumulated depreciation.

On June 1, 2014, Aaron Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years and 30,000 hours. Using straight line depreciation, calculate depreciation expense for the last year.

Residual value is also known as all of the following except

Financial Statement data for the years ended December 31 for Parker Corporation is as follows: 2012 2011 Net Sales $2,595,600 $2,409,498 Fixed Assets: Beginning of the year $ 901,070 $820,000 End of the year 829,330 901,070 a) Determine the Fixed Asset Turnover for 2012 and 2011. b) Does the change in Fixed Asset Turnover from 2011 to 2012 indicate a favorable or unfavorable trend.?

A gain can be realized when a fixed asset is discarded.

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.

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

Fixed assets are ordinarily presented in the balance sheet

A machine with a cost of $75,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours. What is the amount of depreciation for the second full year, using the double declining-balance method?

Long-lived assets that are intangible in nature, used in the operations of the business, and not held for sale in the ordinary course of business are called fixed assets.

Which of the following is included in the cost of constructing a building?