Exam 10: Long -Term Assets

On January 1,a machine with a useful life of five years and a residual value of $4,500 is purchased for $22,500.What is the depreciation expense in year 3 under straight-line depreciation?

Gain on Sale of Machinery is recorded as a debit.

Goodwill reflects all the factors that allow a company to earn a higher-than-market rate of return on its assets.

If net cash flows from operating activities total $115,000,net cash flows from financing activities total $50,000,net cash flows from investing activities total $60,000,purchases of plant assets total $30,000,dividends total $12,000,and sales of plant assets total $17,000,the free cash flow equals

If a revenue expenditure is incorrectly recorded on a company's books as a capital expenditure,which of the following statements will be true?

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

The cost of repairing a machine damaged during installation should be charged as an operating expense.

Equipment was purchased for $117,000.It had an estimated residual value of $18,000 and has a current carrying value of $75,000.Its depreciable cost must have been

One argument in favor of accelerated depreciation is that the asset's benefit is greater in the earlier years.

Gomez Company purchases a piece of equipment on Jan.2,2014,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 2014,using the straight-line method,is

Carrying value

Natural resources are classified as intangible assets on the balance sheet.

It is necessary to distinguish between capital and revenue expenditures because of which of the following accounting rules or principles?

Which of the following items would be considered a revenue expenditure?

A reduction in carrying value as a result of impairment is recorded as a loss.

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

Improvements to real estate are never subject to depreciation.

Which of the following statements is true about the full-costing method?

The amount of depletion of a coal mine in a year may differ from the depletion expense in the same year because

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