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Exam 9: Fixed Assets and Intangible Assets

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Question 1

Multiple Choice

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The exclusive right to use a certain name or symbol is called a

A) franchise
B) patent
C) trademark
D) copyright

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

Correct Answer

verified

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Question 2

Multiple Choice

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Xtra Company purchased goodwill from Argus for $144,000. Argus had developed the goodwill over 6 years. How much would Xtra amortize the goodwill for its first year?

A) $8,640
B) $24,000
C) Goodwill is not amortized.
D) Not enough information.

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

Correct Answer

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C

Question 3

True/False

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

Journalize each of the following transactions: (a)A wing costing $\$ 1,250,000$ was added to the building A new motgage was issued for the cost. (b)Equipment was upgrade d to increase it capacity to produce widgets. The upgrade cost of $\$ 13,000$ was paid in cash (c)A major overhaul costing $\$ 7,000$ on a machine increased the useful life by 2 years. The payment was made in cash

The method used to calculate the depletion of a natural resource is the straight line method.

It is necessary for a company to use the same depreciation method for all of its depreciable assets.

As a company records depreciation expense for a period of time a corresponding cash inflow from investing activities is reported on the statement of cash flows.

A capitalized asset will appear on the balance sheet as a long term asset.

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

A machine with a cost of $80,000 has an estimated residual value of $5,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

Williams Company acquired machinery on July 1, 2009, at a cost of $130,000. The estimated useful life of the machinery was 10 years and the estimated residual value was $10,000. Williams uses the double-declining-balance method of depreciation. On October 1, 2012, Williams sold the equipment for $75,000. 1) Record the journal entry for the depreciation on this machinery for 2012. 2) Record the journal entry for the sale of the machinery.

A machine costing $57,000 with a 6-year life and $3,000 residual value was purchased January 2, 2011. Compute the yearly depreciation expense using straight-line depreciation.

The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is

The difference between the balance in a fixed asset account and its related accumulated depreciation account is the asset's book value.

All property, plant, and equipment assets are depreciated over time.

An estimate of the amount which an asset can be sold at the end of its useful life is called residual value.

Determine the depreciation, for the year of acquisition and for the following year, of a fixed asset acquired on October 1 for $500,000, with an estimated life of 5 years, and residual value of $50,000, using (a) the declining-balance method at twice the straight-line rate and (b) the straight-line method. Assume a fiscal year ending December 31.

Machinery was purchased on January 1, 2010 for $51,000. The machinery has an estimated life of 7 years and an estimated salvage value of $9,000. Double-declining balance depreciation for 2011 would be

The depreciable cost of a building is the same as its acquisition cost.

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: