FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: Long-Term Assets

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

True/False

Review LaterAdd Note

Review Later

Most of the costs associated with internally developed intangible assets are recorded as intangible assets on the balance sheet.We expense most of the costs for internally developed intangible assets to the income statement as we incur them.

A) True
B) False

Correct Answer

verified

Show Answer

Question 52

Multiple Choice

Review LaterAdd Note

Review Later

Lake Incorporated purchased all of the outstanding stock of Huron Company paying $850,000 cash.Lake assumed all of the liabilities.Book values and fair values of acquired assets and liabilities were: Lake would record goodwill of: $\begin{array} { | l | r | r | } \hline & \text { Book Value } & \text { Far Value } \\\hline \text { Current assets (net) } & \$ 130,000 & \$ 125,000 \\\hline \text { Property, plant, equip. (net) } & 600,000 & 750,000 \\\hline \text { Liabilities } & 175,000 & 176,000 \\\hline\end{array}$

A) $0.
B) $150,000.
C) $345,000.

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

Correct Answer

verified

Show Answer

Question 53

True/False

Review LaterAdd Note

When a change in estimate is required,the company changes depreciation in prior,current and future years.When a change in estimate is required,the company changes depreciation in current and future years,but not in prior periods.

Shasta Exploring purchases a piece of equipment for $50,000 and the equipment has an expected useful life of five years.Its residual value is estimated to be $4,000.Assuming Shasta uses the double-declining balance depreciation method,what is the depreciation expense for the equipment for the second full year?

Schager Company purchased a computer system at a cost of $40,000.The estimated useful life is 10 years,and the estimated residual value is $5,000.Assuming the company will use the double-declining-balance method,what is the depreciation expense for the second year?

Asset turnover is net sales divided by ending total assets.Asset turnover is net sales divided by average total assets.

Cowboy Development incurred the following costs associated with the purchase of a piece of land that it will use to re-build an office building: What amount should be recorded for the purchase of the land? $\begin{array} { | l | r | } \hline \text { Sale price of the land } & \$ 400,000 \\\hline \text { Sale of salwaged parts already on land } & \$ 20,000 \\\hline \text { Demolition of the old building } & \$ 30,000 \\\hline \text { Ground breaking ceremony (food and supplies) } & \$ 1,500 \\\hline \text { Land preparation and leveling } & \$ 7,500 \\\hline\end{array}$

Advertising costs that increase the value of trademarks are recorded to the asset account entitled Trademarks.Advertising costs are recorded as expenses in the income statement.

Adding a refrigeration unit to a delivery truck that previously did not have this capability is an example of:

Research and development costs should be:

The amount of impairment loss is the excess of book value over:

Which of the following is considered a "contra" account?

Abbott Company purchased a computer that cost $10,000.It had an estimated useful life of 5 years and no residual value.The computer was depreciated by the straight-line method and was sold at the end of the fourth year of use for $3,000 cash.Abbott should record:

Gains on the sale of long-term assets for cash:

Northern purchased the entire business of Southern including all its assets and liabilities for $600,000.Below is information related to the two companies: How much goodwill did Northern pay for acquiring Southern? $\begin{array} { | l | r | r | } \hline & \text { Northem } & \text { Southem } \\\hline \text { Fair value of assets } & \$ 1,050,000 & \$ 800,000 \\\hline \text { Fair value of liabilities } & 575,000 & 300,000 \\\hline \text { Reported ass ets } & 800,000 & 650,000 \\\hline \text { Reported liabilities } & 500,000 & 250,000 \\\hline \text { Net Income for the year } & 60,000 & 50,000 \\\hline\end{array}$

We record a loss if we sell an asset for less than book value.

In accounting,goodwill

The balance sheet of Paradise Pizza reports total assets of $1,500,000 and $1,700,000 at the beginning and end of the year,respectively.Net income and sales for the year are $240,000 and $2,000,000,respectively.What is Paradise Pizza's return on assets?

The balance sheet of Purdy's BBQ reports total assets of $800,000 and $900,000 at the beginning and end of the year,respectively.The return on assets for the year is 20%.What is Purdy's net income for the year?

We record goodwill as an intangible asset in the balance sheet only when we purchase it as part of the acquisition of another company.