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Exam 8: Reporting and Analyzing Long-Term Assets

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Question 111

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A company had average total assets of $897,000.Its gross sales were $1,090,000 and its net sales were $1,000,000.The company's total asset turnover is equal to:

A) 0.82
B) 0.90
C) 1.09
D) 1.11
E) 1.26

F) A) and E)
G) B) and D)

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Question 112

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Plant assets are:

A) Current assets
B) Used in operations
C) Natural resources
D) Long-term investments
E) Intangible

F) D) and E)
G) A) and D)

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Question 113

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A company purchased office equipment for $4,300 by trading in old equipment with a cost of $2,000 and that had accumulated depreciation of $1,900 as of the exchange date.The company received a $75 trade-in allowance for the old equipment with the balance of $4,225 paid in cash.Prepare the journal entry to record the exchange.

If an asset is sold above its book value,the selling company records a loss.

Heidel Co.paid $750,000 cash to buy the plant assets of Rogers Co.which went out of business.An independent appraiser assigned the following values to the assets acquired: Prepare Heidel's journal entry to record the acquisition of these assets.

Mason Company sold a piece of equipment for $25,000 cash on December 31 after recording the annual depreciation on the asset.The equipment had an original cost of $92,500 and accumulated depreciation of $60,000.Prepare the general journal entry to record the sale of this asset.

Revenue expenditures:

A depreciable asset currently has a $40,100 book value.The company owning the asset uses straight-line depreciation.They paid $70,000 for this asset and consider it to have a $1,000 salvage value with a 12-year useful life.How long has the company owned this asset?

A company exchanged its used machine for a new machine.The old machine cost $70,000 and the new one had a cash price of $95,000.The company had taken $60,000 depreciation on the old machine and was allowed a $2,500 trade-in allowance and the balance of $92,500 was paid in cash.What gain or loss should be recorded on the exchange?