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Exam 8: Reporting and Analyzing Long-Term Assets

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Question 71

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Since goodwill is intangible,it is amortized each year using the straight-line method,the same as other intangibles are amortized.

A) True
B) False

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Question 72

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Natural resources are assets that include standing timber,mineral deposits,oil wells,and gas fields.

A) True
B) False

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Question 73

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A new machine is expected to produce 600,000 units of product during its eight-year useful life.The machine cost $1,800,000 cash and it is estimated to have a $60,000 salvage value.If the machine produces 70,000 units of product during its first year,what is the depreciation for the first year as calculated by the units-of-production method?

Amortization is the process of allocating the cost of natural resources to periods when they are consumed.

_______________________ are expenditures that extend an asset's useful life beyond its original estimate.

Perry Trucking has its local automotive service company change the oil on its trucks.They bill is $1,200,which Perry pays in cash.How would the company record this transaction?

A company made the following expenditures in connection with the construction of its new building: Prepare a schedule showing the amounts to be recorded as land,buildings,and machinery.

A company paid $770,000 plus $5,000 in closing costs for property that included land appraised at $384,000; land improvements appraised at $128,000; and a building appraised at $288,000.The plan is to use the building as a manufacturing plant.Determine the amounts that should be recorded as: a.Land............................$___________________ b.Land Improvements....$___________________ c.Building......................$___________________

A company's annual accounting period ends on September 30.During the current year,a depreciable asset that cost $16,000 was purchased on January 1.The asset has a $2,000 estimated salvage value.The company uses straight-line depreciation and expects the asset to have a four-year life.What is the total depreciation expense for the current year?

When the usefulness of plant assets used to extract natural resources is directly related to the depletion of a natural resource,their costs are depreciated using the units-of-production method of depreciation,as long as the assets will not be moved to and used at another site when extraction of the natural resources is complete.

A copyright:

Explain how to calculate total asset turnover.Describe what it reveals about a company's financial condition,whether a higher or lower ratio is desirable,and how it is best applied for comparative purposes.

Prepare journal entries to record the following transactions of a company during the current year:

Valley Inc.purchases a patent costing $45,000 with a remaining useful life of 15 years.How would the company record the adjusting entry to record the amortization of this patent at the end of each of the years in its useful life?

Extraordinary repairs:

Ace Company purchased a machine valued at $320,000 on August 1.The equipment has an estimated useful life of five years or 2.5 million units.The equipment is estimated to have a salvage value of $8,200.Assuming the straight-line method of depreciation,what is the amount of depreciation expense that needs to be recorded at the end of the first year?

Intangible assets are certain nonphysical assets used in operations that confer on their owners long-term rights,privileges,or competitive advantage.

A company purchased equipment on July 3 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.

An asset's cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.

The total cost of an asset less its accumulated depreciation is called: