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Exam 9: Long-Lived Tangible and Intangible Assets

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Question 41

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Which of the following statements is true?

A) Long-lived tangible assets will not be used up within one year,but there is no minimum useful life for long-lived intangible assets.
B) Items in a company's inventory that are not expected to be sold in the next year are considered long-lived assets.
C) All long-lived intangible assets must be expensed over a period of 40 years or less.
D) Intangible assets with unlimited or indefinite lives are not amortized.

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Question 42

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If a company produces the same number of units per period over an asset's useful life,straight-line depreciation expense per period will be the same as the depreciation expense recorded using the units-of-production method.

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Question 43

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Goodwill is a peculiar intangible asset because it represents the value paid for the identifiable assets of another business.

A trucking company sold its fleet of trucks for $55,000.The trucks had originally cost $1,410,000 and had accumulated depreciation of $1,269,000 through the date of disposal.What gain or loss did the trucking company record when it sold the fleet of trucks?

The MegaHit Film Studio owns a production lot and related equipment.How would MegaHit Company classify these assets on its balance sheet?

During 2018,Company X sells 500,000 units for $8 each.Sales discounts are $100,000 and sales returns and allowances are $300,000.The company reported a total of $710,000 in fixed assets on January 1,2018 and $890,000 in fixed assets on December 31,2018. a.Calculate net sales revenue. b.Calculate average fixed assets. c.Calculate the fixed asset turnover ratio. d.Assume the 2018 fixed asset turnover ratio was lower than the 2017 ratio.Describe one circumstance where this change would indicate bad news and one circumstance where this change would be consistent with good news.

When a company sells equipment for cash on a date other than the last day of the accounting period,it must record:

ShadyZ Corporation uses the unit-of-production method to estimate depreciation.A new asset is purchased for $18,000 that will produce an estimated 100,000 units over its useful life.Estimated residual value is $2,000.What is the depreciation rate per unit?

Paul Hauling has a fleet of 10 large trucks that cost a total of $1,410,000.The fleet is expected to provide 1,000,000 miles of transportation during an estimated 10-year life,and be sold for 10% of the original cost at the end of that time.If the fleet traveled 125,000 miles in the current twelve-month period,what would be the depreciation expense under the straight-line (SL) and units-of-production (UoP) methods?

Intangible assets are not adjusted for asset impairment losses.

Which of the following is $\bold{not}$ an amount that is needed to calculate straight-line depreciation?

After the early years of an asset's life,accelerated depreciation methods:

The Gulp convenience store chain buys new soda machines for $450,000 and pays $50,000 for installation.One-half of the total cost is paid in cash; the other half is financed.How should the company record this transaction?

If a company buys a piece of used equipment and incurs repair costs before it can be used,these additional costs would be capitalized as a cost of the equipment.

Which of McGraw-Hill's intangible assets gives it the legal right to prevent you from borrowing a textbook from a friend and photocopying all of it?

Assuming no additions,replacements,or extraordinary repairs,the carrying value of a long-lived asset is never more than its original cost.

In accordance with accounting convention,all fixed assets must be capitalized.

Purrfect Pets has a facility that originally cost $375,000.The balance of the accumulated depreciation account for the facility is $258,000.The company expects to be able to sell the facility for $107,000 at the end of its useful life.The depreciable cost of the facility is:

Which of the following methods would be a typical choice when asset use fluctuates significantly from period to period?

Ski Lodge Inc.purchased a building for $20 million.The building is depreciated using the straight-line method over 20 years and has no residual value.At the end of year 16,Ski Lodge Inc.sold the building for $5 million in cash.Depreciation had been updated to the point in time of the sale.Show the accounting equation effects from this transaction.Also,write down the journal entry from the disposal.