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Exam 10: Fixed Assets and Intangible Assets

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Question 91

True/False

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The units of production depreciation method provides a good match of expenses against revenue.

A) True
B) False

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Question 92

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When cities give land or buildings to a company to locate in the community, no entry is made since there is no cost to the company.

A) True
B) False

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Question 93

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All property, plant, and equipment assets are depreciated over time.

A gain can be realized when a fixed asset is discarded.

Which of the following is true?

An asset was purchased for $120,000 on January 1, 2010 and originally estimated to have a useful life of 10 years with a residual value of $10,000. At the beginning of 2012, it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,000. Calculate the 2012 depreciation expense using the revised amounts and straight line method.

Standby equipment held for use in the event of a breakdown of regular equipment is reported as property, plant, and equipment on the balance sheet.

On December 31, Strike Company has decided to discard one of its batting cages. The initial cost of the equipment was $310,000 with an accumulated depreciation of $260,000. Depreciation has been taken up to the end of the year. The following will be included in the entry to record the disposal.

The calculation for annual depreciation using the straight-line depreciation method is

Eagle Country Club has acquired a lot to construct a clubhouse. Eagle had the following costs related to the construction: Determine the cost of the Club House to be reported on the balance sheet.

When determining whether to record an asset as a fixed asset, what two criteria must be met?

On December 31, Strike Company has decided to trade-in one of its batting cages for another one that has a cost of $500,000. The seller of the batting cage is willing to allow a trade-in amount of $11,000. The initial cost of the old equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. The difference will be paid in cash. What is the amount of the gain or loss on this transaction?