Exam 11: Long Term Assets

According to generally accepted accounting principles, the proper accounting treatment of the cost of developing intangible assets is to

How is Accumulated Depletion disclosed in the financial statements?

Which of the following is not a component of free cash flow?

Sky Company purchased a machine for $15,500. The machine is expected to last four years and has a residual value of $1,500. The entry to record depreciation expense at the end of first year using straight-line method is:

Interest costs are included in the cost of an asset in conjunction with

Press Corporation purchased a truck for $40,000. The company expected the truck to last four years or 100,000 miles, with an estimated residual value of $4,000 at the end of that time. During the second year, the truck was driven 27,500 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.)

Which of the following items is not classified as a natural resource?

The Equipment account would include all of the following costs except

Mustin, Inc. purchased equipment for $50,000. The equipment had an estimated useful life of eight years and an estimated residual value of $6,000. After five years of use, the estimated residual value is changed to $9,000. Assuming straight-line depreciation, depreciation expense in year 6 would be

Intangible assets are subject to a process called depreciation.

Which of the following statements is not true about depreciation for tax purposes?

The depreciable cost of an asset is

An asset that cost $24,000 and has accumulated depreciation of $18,000 is sold for $5,200. The entry to record the sale is

A capital expenditure will result in an immediate increase in long-term assets.

Book value refers to the market value of a long-term asset.

Underestimating the number of tons of a mineral that can be mined over a mineral deposit's life will result in

In 2009 , Kallen Enterprises purchased an oil well for $12,000,000. It is estimated that 80,000,000 barrels can be extracted from the well. Depletion expense during 2010 , when 2,000,000 barrels were extracted and sold, totaled

Drilling equipment with a five-year useful life is used solely in conjunction with an oil well that has an eight-year life. The equipment should be depreciated over eight years.

On January 1, a machine with a useful life of five years and a residual value of $3,000 is purchased for $15,000. What is the depreciation expense in year 2 using the double-declining-balance method?

Depreciation refers to the periodic allocation of the cost of a tangible long-lived asset over its estimated useful life.