Exam 9: Long-Lived Assets

A company purchased land for $70,000 cash. $7,000 was spent for demolishing an old building on the land before construction of a new building could start. The cost of land would be recorded at

Dorchester Company purchased a new van for floral deliveries on July 1, 2014. The van cost $20,000 with an estimated life of 5 years and $5,000 residual value at the end of its useful life. The double diminishing-balance method of depreciation will be used. -What is the balance of the accumulated depreciation account at the end of 2015?

Interest may be included in the acquisition cost of property, plant, and equipment

Which of the following statements is correct?

Once an asset is fully depreciated, no additional depreciation can be taken even though the asset is still being used by the business.

In the straight-line method, the higher the residual value the greater the profit.

On October 1, 2014, Marshwinds Wind Turbine Company places a new asset into service. The cost of the asset is $8,000 with an estimated 5-year life and $2,000 residual value at the end of its useful life. -What is the carrying amount of the long-lived asset on the December 31, 2014, balance sheet assuming that Marshwinds Wind Turbine Company uses the double diminishing-balance method of depreciation?

Asset turnover is calculated as follows:

The following information is available from the audited financial statements of Molson Coors Brewing Company and Big Rock Breweries Income Trust for their 2014 year ends. Instructions a. Calculate both companies' asset turnover and return on assets. b. Compare the companies' effectiveness in using their assets to produce revenue and profit.

Rust Company was organized on January 1. During the first year of operations, the following expenditures and receipts were recorded in random order in the account, Land. Instructions Analyze the above transactions using the following columns below. Insert the number of each transaction in the Item space and insert the amounts in the appropriate columns.

A loss on disposal of a long-lived asset is reported in the financial statements

It is appropriate to stop recording depreciation expense when the asset's

If an intangible with an indefinite life is disposed of, there is no effect on profit.

A high return on assets indicates

A long-lived asset was purchased on January 1 for $30,000 with an estimated residual value of $6,000 at the end of its useful life. The current year's depreciation expense is $3,000 calculated on the straight-line basis and the balance of the accumulated depreciation account at the end of the year is $15,000. The remaining useful life of the asset is

In an exchange of assets, the new asset is recorded at

An asset that CANNOT be sold individually is

Subject to acquisition, all costs that relate to that asset are classified as operating expenses.

Which of the following would NOT be considered an addition to the capital cost of an asset?

The diminishing-balance method will yield a higher cost of goods sold.