Exam 8: Long-Term and Other Assets

A building was purchased on August 1 for $490,000. It has a salvage value of $38,000 and a useful life of 30 years. To the nearest dollar, how much will the depreciation expense for the building be for the first year ended December 31, using the straight-line method? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

Increases in the value of a security while the company still owns it are considered realized gains.

Amortization is computed over the useful life of the intangible asset using the double-declining-balance method.

A company purchased furniture on January 1. Its cost was $15,600, and it had a residual value of $3,600. Its useful life is determined to be 8 years. Using double-declining balance depreciation, the depreciation for year 1 to the nearest dollar will be:

Upgrading the RAM on a computer would be an example of a(n):

Calculating depreciation using a base such as miles driven per year would be an example of double-declining balance depreciation.

Metropolitan Masonry made a basket purchase of three items. Item X was appraised at $39,000; item Y was appraised at $57,000 and item Z was appraised at $61,000. The purchase price was $129,000. The amount at which item Y should be recorded is:

A company purchased a computer system on March 1. Its cost was $55,000 and it had an estimated salvage value of $10,000. It was expected to have a useful life of 5 years. To the nearest dollar, the depreciation for year 2 using straight-line depreciation will be: (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

A method best suited for depreciating items, such as copy machines and vehicles, would be the:

Which of the following would be considered a fixed asset?

Items such as precious metals are considered natural resources.

Charmed Inc. has net income of $50,000, sales of $250,000, beginning total assets of $150,000 and ending total assets of $200,000. The return on assets is (rounded)33%.

Which of the following would be debited as part of what you got in a transaction involving an exchange of assets?

Adding on 30 rooms to an existing hotel would be considered a betterment because the addition added to the hotel's capacity.

Cost divided by the total amount of the natural resource to be removed yields:

Patents to produce and sell inventions are conveyed by the federal government for a period of:

The cost of long-term assets must be allocated to an expense as the asset is used up.

Costs of testing machinery or equipment before they are used would be included in the price of the machinery or the equipment.

Incorrectly capitalizing an expense results in net income being overstated.

A new vehicle was purchased on January 1 for $46,000. It has a salvage value of $7,000 and a useful life of 6 years. To the nearest dollar, how much will the depreciation expense for the vehicle be for the first year using the straight-line method?