Exam 9: Long-Term Assets

Mozilla 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. )

The copyright granting the exclusive rights to sell artistic materials and computer programs ends with the author's life.

Driveways and parking lots are properly included in the Land account because they are not subject to depreciation.

Free cash flow is

Which of the following assets is not subject to depreciation,depletion,or amortization?

A truck is purchased for $70,000.It has a five-year life and a $10,000 residual value. -Under the double-declining-balance method,what is the accumulated depreciation after two years?

What commitments must a company account for in determining its free cash flow?

Which of the following depreciation methods is the most logical for a machine that produces discrete (i.e. ,separate)units?

Justin,Inc.purchased equipment for $100,000.The equipment had an estimated useful life of eight years and an estimated residual value of $12,000.After five years of use,the estimated residual value is changed to $18,000.Assuming straight-line depreciation,depreciation expense in year 6 would be

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

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

If an asset costs $41,000,has a residual value of $3,000,and has a useful life of five years,the entry to record depreciation in the second year using the double-declining-balance method is

Using the full-costing method,the cost of dry wells is capitalized with the cost of producing wells.

Horshack Mining Company purchases a gravel pit for $5,000,000.It estimates that 10,000,000 tons of gravel can be extracted over the pit's useful life.If 1,860,000 tons are extracted and sold during the first year,the entry to record depletion expense will include

Linkletter obtained a five-year sublease and paid $25,000 to the current tenant on January 1,20X1.The entry to record the transaction is:

Normally,depreciation calculations are based on the exact number of days the asset is held during the period.

Which of the following most appropriately describes depreciation?

Intangible assets are subject to a process called depreciation.

Which of the following is not classified properly as property,plant,and equipment?

An expenditure to lengthen the useful life of a company vehicle would require a