Exam 11: Long Term Assets

Which of the following is not a characteristic of all long-term assets?

In 2010, Massachusetts Mining purchased a mineral deposit for $36,000,000. It is estimated that 15,000,000 tons can be extracted from the mine. Calculate depletion expense during 2010 when 800,000 tons were extracted and sold.

Al's Car Wash purchased a piece of equipment on October 1, 2008, for $27,000. The equipment has an estimated life of four years or 40,000 units of production and an estimated residual value of $2,000. Compute depreciation for 2008, 2009, and 2010 rounding answers to the nearest dollar using the following methods: (a) straight-line, (b) production, and (c) double-declining-balance. Assume that the company's fiscal year corresponds to the calendar year and that 3,000, 12,000, and 8,000 units were produced in the respective years. (Show your work.)

A capital expenditure is an expenditure that benefits only the current accounting period.

Small expenditures for what ordinarily are considered revenue expenditures frequently are treated as capital expenditures.

All of the following are possible reasons for using accelerated depreciation except

Equipment was purchased for $78,000. It had an estimated residual value of $12,000 and has a current carrying value of $50,000. Its depreciable cost must have been

Estimated useful life and legal life are synonymous terms when dealing with intangible assets.

In calculating the depletion of a natural resource, its useful life in years is irrelevant.

If the carrying value of goodwill is less than its fair value, an impairment loss must be recorded.

Which of the following is not considered an intangible asset?

In the calculation of free cash flow, dividends and sales of plant assets are both deducted.

A machine that cost $13,000 and on which $9,300 of accumulated depreciation had been recorded was disposed of for $3,700. The entry to record the disposal of the machine is:

Grannis Corporation purchased land adjacent to its plant to improve access for trucks making deliveries. Expenditures incurred by the company were as follows: purchase price, $40,000; broker's fees, $7,000; title search and other fees, $6,000; demolition of an old building on the property, $3,700; grading, $1,200; digging foundation for the road, $3,000; laying and paving driveway, $25,000; lighting, $7,500; signs, $1,500. List the items and the amounts that should be included in the Land account.

When the trade-in allowance exceeds the carrying value of an asset exchanged, a loss has occurred.

Accelerated depreciation assumes all of the following except that

The term used to describe the allocation of the cost of an intangible asset to the periods it benefits is

On January 1, 2005, Mal's Pizza purchased for $24,000 a delivery truck that will be driven an estimated 120,000 miles. The truck has an estimated useful life of eight years and an estimated residual value of $6,000. Calculate the following amounts: (a) depreciation expense for 2010 , under the production method (assume that 17,000 miles were driven that year); (b) the accumulated depreciation after the truck has been used for five and one-half years, under the straight-line method; and (c) depreciation expense for 2007, under the double-declining-balance method.

Which of the following would be considered a capital expenditure?

The construction of a new wing on an existing building is described as a(n)