ACT300 - Mod6
Miko, Inc. sold a building for $200,000 at the end of the eighth year of its ten-year estimated life. The building was originally purchased for $450,000. The asset was depreciated using the straight-line method. When the company sells the asset at the end of the eight-year, the company should recognize a/an ________.
$110,000 gain
LinkUp, Inc. paid $450,000, plus $25,000 in closing costs, to buy a parcel of land with a factory on it. The purchase also contained equipment. The land is appraised at $130,000, a building appraised at $325,000, and equipment appraised at $50,000. Compute the cost that should be allocated to the land.
$122,277
Jackson Implements, Inc. uses straight-line depreciation for an item of equipment that cost $135,000, had a salvage value of $15,000, and had a six-year useful life. Determine the amount of depreciation to be charged against the machine during each of the six years of its useful life using straight line depreciation.
$20,000
The double declining balance depreciation method will result in the following pattern of depreciation:
A depreciation amount that starts high and decreases year after year
When an asset is depreciated over its life, the credit for the journal entry goes to what account?
Accumulated Depreciation
The straight-line depreciation amount will result in which of the following patterns of depreciation?
An equal amount of depreciation each year.
Which of the following describes the concept of capitalization?
Capitalization is when the purchase cost of an item is recorded as an asset.
Which depreciation method results in a higher amount of depreciation in the earlier years and a lower amount of depreciation in later years?
Double-declining-balance
(True) or (False)? The most common method companies use is double-declining balance, because it allows companies to recognize for depreciation expense up front.
False
(True) or (False)? The units of the depreciation method result in an accelerated amount of depreciation, increasing year after year.
False
True or False? Land is always depreciated using the straight-line method, allocating it over the best estimate of its life.
False
Which of the below assets can never be depreciated?
Land
Which of the below assets would most likely be depreciated?
Parking lot
When a company reports a loss on the sale of an asset, this means that:
The company received less from the sale of the asset than the book value
When a company reports a gain on the sale of an asset, this means that:
They have sold the asset for more than the undepreciated amount (i.e. net book value).
(True) or (False)? The total amount of depreciation accumulated for an asset over its entire life will differ depending on the method of depreciation used.
True
An intangible asset is ________.
an asset that lacks physical substance, but still has value to the company
(True) or (False)? Accumulated depreciation is recorded as a contra expense account on the income statement, and the depreciation expense is recorded as an asset on the balance sheet.
false
(True) or (False)? The gain or loss on the sale of an asset can be calculated as the difference between sale price and accumulated depreciation.
false
Goodwill is an asset that is adjusted by________
is not amortized and instead is tested for impairment only
Miko, Inc. sold a building for $200,000 at the end of the eighth year of its ten-year estimated life. The building was originally purchased for $450,000. The asset was depreciated using the straight-line method. When the company sells the asset at the end of the eight-year, the company should recognize a/an ________.
not b
LollyPopper Candies, Inc. purchased land for its natural resources at a cost of $32,500. It expects to mine 200,000 tons of ore from this land. The depletion expense per ton of ore is ________.
not b c
Which asset is classified as an intangible asset?
patent
For accounting purposes, depletion for natural resources is most similar to what method of depreciation that would normally apply to a fixed asset?
units of production
