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Exam 8: Accounting for Long-Term Operational Assets

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Question 31

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Which of the following terms is used to describe long-term assets that have no physical substance and provide rights,privileges and special opportunities to businesses?

A) Tangible assets
B) Intangible assets
C) Natural resources
D) Property, plant and equipment

E) None of the above
F) All of the above

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Question 32

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What value will be reported for the land on the balance sheet?

A) $370,000
B) $1,100,000
C) $323,000
D) $760,000

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

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Question 33

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How will an impairment loss of $15,000 relating to goodwill affect the elements of the financial statements?

Goodwill is the value attributable to good employee morale.

A substantial amount spent to improve the quality or extend the life of a long-term asset is called a revenue expenditure.

A trademark is a tangible asset with an indefinite useful life.

Which of the following would not be classified as property,plant and equipment?

Schubert Co.owned equipment that originally cost $48,000.On January 1,Year 6,the company sold the equipment for $16,000 cash.Accumulated depreciation on the day of sale amounted to $34,000.Based on this information,indicate whether each of the following statements is true or false.

On January 1,Year 1,Woolly Company purchased a truck that cost $64,000.The truck had an expected useful life of 120,000 miles over 8 years and a $4,000 salvage value.During Year 2,Woolly drove the truck 20,000 miles.Woolly uses the units-of-production method.What is the amount of depreciation expense recognized in Year 2?

Which of the following statements is correct regarding accounting treatment of goodwill?

Which of the following terms is used to identify the expense recognition associated with intangible assets?

Hoover Company acquired Burgess Company for $1,200,000 cash.The fair value of Burgess' assets was $1,040,000,and the company had liabilities of $60,000.How much goodwill did Hoover Company acquire in the purchase?

On January 1,Year 1,XYZ Company paid $60,000 cash to purchase a truck.The truck has a $5,000 salvage value and a 4-year useful life.XYZ uses the double-declining-balance method.How much depreciation expense would XYZ report on its Year 2 income statement?

At the end of Year 5,the equipment was still owned by Jing Company.What is the book value of the office equipment using the straight-line method and double-declining-balance method,respectively?

When Company X purchases Company Y,Company X should record Company Y's assets at their fair value at the time of the acquisition.

Madison Company owned an asset that had cost $44,000.The company sold the asset for $16,000.Accumulated depreciation on the day of sale amounted to $32,000.Which of the following statements is true?

Recognizing depreciation expense on equipment or a building is an asset use transaction.

On January 1,Year 1,Parker Company purchased an asset costing $20,000.The asset had an expected five-year life and a $2,000 salvage value.The company uses the straight-line method.What are the amounts of depreciation expense and accumulated depreciation,respectively,that will be reported in the Year 2 financial statements?

Chico Company paid $950,000 for a basket purchase that included office furniture,a building and land.An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Office furniture,$190,000; Building,$740,000; and Land,$132,000.Based on this information,what is the cost that should be allocated to the office furniture? (Round allocation percentage to two decimal places.)

On January 1,Year 1,Warren Co.purchased a machine for $120,000.Warren estimated the useful life of the machine to be 10 years and the salvage value to be $20,000.Indicate whether each of the following statements is true or false.