Exam 8: Long-Term and Other Assets

A company purchased a computer system on March 1. Its cost was $40,000, and it had an estimated salvage value of $5,000. It was expected to have a useful life of five years. To the nearest dollar, the depreciation for year 1 using straight-line depreciation will be: (Assume company year-end is December 31. Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

Book value is depreciable cost minus accumulated depreciation.

Leo's Lawncare purchased equipment on January 1. The cost was $15,000, and the equipment had a residual value of $5,000. The equipment was given a useful life of 10 years. After the end of two years, it was determined that the equipment would be obsolete in 5 more years and the residual value would still be $5,000. What will be the depreciation under the straight-line method to the nearest dollar be for the third year?

When a company pays a single price for a group of assets, the purchase is referred to as a basket purchase.

Sassycat Designs inadvertently recorded an expense as a capital expenditure. Which of the following will occur as a result of this mistake?

Which of the following would NOT be considered an intangible asset?

If an asset is being discarded then there is no need to update the depreciation prior to disposal.

Which of the following is NOT true regarding depletion?

Capitol Construction Company made a basket purchase of three items. Item X was appraised at $55,000; item Y was appraised at $65,000 and item Z was appraised at $40,000. The purchase price was $125,000. The amount at which item Z should be recorded (rounded to the nearest dollar)is: (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

Which of the following would be included in the cost of a constructed building?

Replacing an engine on a delivery truck would be considered a betterment.

Only Organics has a delivery truck that was purchased for $48,000 and has a salvage value of $4,000. It expects the truck to last 200,000 miles. During Year 1, the truck traveled 32,500 miles and during Year 2, the truck traveled 29,500 miles. What is the depreciation expense for Year 2 to the nearest dollar using the units-of-production method? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar.)

A company purchased a computer on August 1, 2016. Using straight-line depreciation, the company would report four (4)months depreciation on December 31, 2016.

Trading securities are shown as long-term assets on the Balance Sheet.

Equipment costing $73,000 has accumulated depreciation of $54,000. The equipment is a trade-in for new equipment costing $90,191. If the trade-in value received for the old equipment is $15,000, the journal entry to record this transaction is to:

Interest and dividends earned during the period are reported on the Income Statement for which kind of marketable securities?

Which of the following would be considered part of land improvements?

Other than land, long-term assets that are capitalized are:

Spring Creek Mines purchased a vein of mineral ore for $3,260,000. It is estimated that 20,000,000 tons of ore are available to be extracted. The estimated depletion expense for this year's extraction of 1,770,000 tons of ore is: (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

Shakes, Inc. purchased 200 shares of Netflix stock, which it plans to sell as soon as the market price increases by 10%. This stock will be classified as: