Exam 11: Long Term Assets

When a company can prove it is worth more than its balance sheet indicates, it may record some goodwill.

The unexpired cost of a plant asset is referred to as its

Failure to record depletion for a given accounting period will result in

Saticoy Corporation purchased a truck for $50,000. The company expected the truck to last five years or 100,000 miles, with an estimated residual value of $5,000 at the end of that time. During the second year, the truck was driven 23,000 miles. Compute the depreciation for the second year under each of the following methods: (a) straight-line, (b) production, and (c) double-declining-balance. (Show your work.)

When an asset lasts longer than its estimated useful life, depreciation no longer should be recorded.

A $750 gain on the sale of an asset means that $750 in cash was received.

Intangible assets are also called wasting assets.

Which of the following would be considered a revenue expenditure?

The exclusive right to sell a computer program is covered by which intangible?

A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of on January 1. Assume that the truck was disposed of for $2,000 cash. The entry to rec ord this event is

A specialized piece of equipment closely associated with a mine is most likely to be depreciated over a shorter than normal useful life because the

A positive net present value of a long-term asset under consideration for purchase indicates that the asset should probably be purchased.

Accelerated methods of depreciation result in lower net income in the last years of an asset's life compared to the straight-line method.

Which of the following methods ignores residual value initially but eventually considers it in the calculation of depreciation?

When depreciation rates are revised, all years of the asset's life are affected by the new computation.

Equipment costing $30,000 with a residual value of $3,000 and an estimated life of eight years has been depreciated using the straight-line method for two years. Assuming a revised estimated total life of five years, the depreciation expense for year 3 would be

Which of the following would not be a basis for estimating the useful life of a piece of equipment?

A patent has a legal life of 20 years.

Lester Company purchases a piece of equipment on Jan. 2, 2010, for $30,000. The equipment has an estimated life of eight years or 50,000 units of production and an estimated residual value of $3,000. Lester uses a calendar fiscal year. The entry to record the amount of depreciation for 2010, using the straight-line method, is

A company purchases land and a building on the land. The land is appraised at $80,000 and the building at $320,000. If the Land account is debited for $104,000, then the total purchase price for the land and building must have been