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Exam 8: Long-Term Assets

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Question 81

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The Weiss Company purchased a truck for $95,000 on January 2,2011.The truck was estimated to have a $3,000 salvage value and a four-year life.The truck was depreciated using the straight-line method.During 2013,it was obvious that the truck's total useful life would be six years rather than four and the salvage at the end of the sixth year would be $1,500.Determine the depreciation expense for the truck for the six years of its life. $\begin{array} { | l | l | } \hline{ \text { Year } } & \text { Depreciation Expense } \\\hline 2011 & \\\hline 2012 & \\\hline 2013 & \\\hline 2014 & \\\hline 2015 & \\\hline 2016 & \\\hline\end{array}$

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2012 - 2013 depreciation = ($95,000 - $3...

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Question 82

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A company had net sales of $541,500 in 2013 and $475,300 in 2014.Its average assets were $410,000 for 2013 and $400,000 for 2014.(1)Calculate the total asset turnover for each year.(2)Interpret and comment on the company's efficiency in the use of its assets.

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2013: $541,500/$410,000 = 1.32
2014: $47...

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Question 83

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The three usual means for disposal of an asset are: _________________________________________________________.

Plant assets are assets that are held for sale.

Depreciation measures the actual decline in market value of an asset.

A company purchased equipment valued at $200,000 on January 1.The equipment has an estimated useful life of six years or 5 million units.The equipment is estimated to have a salvage value of $13,400.Assuming the double declining balance method of depreciation,what is the book value at the end of the second year?

Total asset turnover is used to evaluate:

A copyright:

An ore deposit costing $800,000 is expected to produce 1,600,000 tons of ore.A total of 70,000 tons are mined and sold in the current year.The depletion expense for the current year is $35,000.

Revenue expenditures are additional costs of plant assets that materially increase the assets' life or productive capabilities.

On September 30 of the current year,a company acquired and placed in service a machine at a cost of $700,000.It has been estimated that the machine has a service life of five years and a salvage value of $40,000.Using the double-declining-balance method of depreciation,prepare a schedule showing depreciation amounts for the current year and the next four years (round answers to the nearest dollar).The company closes its books on December 31 of each year.

Cobb Corn Company purchases a large lot on which a building is located.The negotiated purchase price is $2,500,000 for the lot and the building.The company pays $71,500 in commissions and taxes.The appraisal values of each item is as follows: land $650,000,building $1,750,000,land improvements $120,000.What is the appropriate amount to be recorded in the general journal for the building?

A company purchased a POS cash register on January 1 for $5,400.This register has a useful life of 10 years and a salvage value of $400.What would be the depreciation expense for the second-year of its useful life using the double-declining-balance method?

On December 31,2013,Stable Company sold a piece of equipment that was purchased on January 1,2008.The equipment originally cost $820,000 and has an estimated useful life of eight years.Stable uses the straight-line method of depreciation.What is the gain/loss on the sale of equipment that Stable will recognize if the equipment was sold for $230,000?

A company paid $150,000,plus a 6% commission,and $4,000 in closing costs for a property.The property included land appraised at $87,500,land improvements appraised at $35,000,and a building appraised at $52,500.What should be the allocation of this property's costs in the company's accounting records?

Match the following definitions with the appropriate terms

Depreciation:

A company purchased a leasehold property for $8,400,000.The leasehold expires in 15 years.Prepare the journal entry to record the first year's amortization expense.

The _____________________ principle requires that companies report the amount of accumulated depreciation on plant assets as well as the depreciation methods used to determine the annual depreciation expense.

Explain how to calculate total asset turnover.Describe what it reveals about a company's financial condition,whether a higher or lower ratio is desirable,and how it is best applied for comparative purposes.