Exam 11: Long Term Assets

The cost of a long-term asset is expensed

A company purchases for $24,000 an asset that has a useful life of six years and no salvage value. After two years, the company spends $4,000 for a major overhaul that will extend the machine's useful life four years beyond the original six. Assuming straight-line depreciation, how much depreciation should be taken in year 3?

According to generally accepted accounting principles, goodwill is recorded as an asset

A machine was purchased for $40,000. It has a current carrying value of $26,000 and had a depreciable cost of $36,000. Its estimated residual value must have been

On January 2, 2009, Vanowen Company purchased a machine for $80,000. The machine has an eight-year estimated useful life and an $8,000 estimated residual value. In addition, the company expects to use the machine 200,000 hours. Assuming that the machine was used 35,000 hours during 2010, complete the following chart. If a figure cannot be determined, indicate so by placing an X in the box. (Show your work.) Method Depreciation Expense for 2010 Carrying Value at 12/31/10 Straight-line Production Double-declining-balance

A revenue expenditure results in the recognition of an asset.

An expenditure for which of the following items would be considered a revenue expenditure?

When an intangible asset becomes worthless,

Asset impairment occurs when the fair value of a long-term asset exceeds its carrying value.

The cost of tearing down a building on land just purchased should be

Leroy Mining Company purchased land containing an estimated 10,000,000 tons of ore for a cost of $750,000. The land without the ore is estimated to be worth $150,000 (the residual value). Buildings costing $45,000 with an estimated useful life of 20 years were erected on the site. Because of the remote location, the buildings have no residual value. The company expects that all the usable ore can be mined in eight years. During its first year of operation, the company mined 1,000,000 tons of ore and at the end of the year had an inventory of 200,000 tons. Determine the following amounts for the first year: (a) depletion charge per ton; (b) depletion expense for year; and (c) depreciation expense for buildings, using the straight-line method. (Show your work.)

Computation of a partial year's depreciation is often required for the proper determination of net income.

Additions and betterments are examples of capital expenditures.

Which of the following statements is true about successful efforts accounting?

The entry to record the sale of equipment costing $40,000, with accumulated depreciation of $34,000 and sale price of $7,700, is

Leasehold improvements are not subject to any form of cost allocation.

In general, how does one determine whether or not an expenditure should be included in the acquisition cost of property, plant, and equipment?

Which of the following is irrelevant in computing a machine's depreciation expense using the production method?

One argument in favor of accelerated depreciation is that the assets benefit is greater in the earlier years.

A betterment does not add to the physical layout of an asset.