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Exam 6: Accounting for Long-Term Operational Assets

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Question 51

True/False

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When Company X purchases Company Y,X should record Y's assets at their fair market value at the time of the acquisition.

A) True
B) False

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Question 52

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Zabinski Co.paid $150,000 for a purchase that included land,building,and office furniture.An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Land,$20,000,Building,$150,000,and Office furniture,$30,000.Based on this information the cost that would be allocated to the land is

A) $17,500.
B) $20,000.
C) $25,000.
D) $15,000.

E) None of the above
F) A) and B)

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Question 53

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Philips Corporation purchased a truck that cost $26,000.The company expected to drive the truck 100,000 miles.The truck had an estimated salvage value of $2,000.If the truck is driven 36,000 miles in the current accounting period,which of the following amounts should be recognized as depreciation expense?

Explain how a choice of depreciation methods will have an impact on financial performance measures.Give one example.

Which of the following assets is considered to have an indefinite useful life?

Which of the following correctly shows the effect of Falbo's purchase of the copyright on its financial statements?

Which of the following would not be classified as a tangible long-term asset?

At the beginning of 2013,Reno revised the expected life to eight years.The annual amount of depreciation expense for each of the remaining years would be:

Which of the following terms is used to identify the process of expense recognition for buildings and equipment?

The Borger Company purchased an asset for $20,000 on January 1,2007.The asset had a zero salvage value and an 8-year estimated useful life.On January 1,2012 the company spent $2,000 cash on routine repair and maintenance.What effect will recording the 2012 expenditure have on the company's financial statements for the year?

The fair value of the assets and liabilities for Zane's Restaurant were $450,000 and $160,000,respectively.If Reiner Company pays $325,000 cash for the restaurant and assumes its existing liabilities,what amount of goodwill would Reiner record?

On January 2,2012,Brimm Corporation purchased a delivery truck for $20,000.The estimated useful life of the truck is 5 years,with an estimated salvage value of $4,000.The truck is expected to be driven 200,000 miles during the five year estimated useful life. a)If Brimm uses double-declining balance depreciation,what is the amount of depreciation for 2013? What is the balance of the accumulated depreciation account at the end of 2013 after adjusting entries have been made? b)Refer to part a.Assume Brimm used the double declining balance method for depreciation and sold the truck at the beginning of 2014 for $12,000.What is the amount of the gain or loss on the sale of the delivery van? c)Assume that Brimm used units-of-production depreciation.The delivery van was driven 50,000 miles the first year and 40,000 miles the second year.What is the amount of depreciation expense for 2012 and for 2013? What is the balance of the accumulated depreciation account at the end of 2013 after adjusting entries have been made?

For what types of assets is the recognition of expense called "amortization?"

The use of estimates and revision of estimates are uncommon in financial reporting.

Double-declining-balance depreciation produces more depreciation in the later years of an asset's life than does the straight-line method.

On January 1,2012,St.John Corp.purchased a new truck for $35,000.St.John determined that this truck would be useful for 150,000 miles at which time it would have a salvage value of $5,000.During the next three years the truck was driven for 25,000,20,000,and 28,000 respectively.At the beginning of the fourth year (2015),St.John had to overhaul the truck's engine at a cost of $7,000.The overhaul increased the life of the truck by adding 20,000 miles of use.During the fourth year the truck was driven for 23,000 miles. Required: a)Calculate depreciation expense for the first three years.(2012,2013,2014) b)Calculate depreciation expense for 2015.

How is an expenditure that improves the quality of a piece of equipment recorded?

How does the treatment of goodwill differ between the US and the United Kingdom?

Mobley Company purchased an asset with a list price of $35,000.Mobley received a 2% cash discount.The asset was delivered under terms FOB shipping point,and freight costs amounted to $700.Mobley paid $1,500 to have the asset installed.Insurance costs to protect the asset from fire and theft amounted to $400 for the first year of operations.Based on this information,the cost recorded in the asset account would be

On which financial statement(s)would the account "Loss on Sale of Land" appear?