Question 1

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?

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Question 2

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.

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Question 3

During the current year,a company acquired a new computer with a cash price of $12,800 by exchanging an old one on which the company received a $1,500 trade-in allowance (with the balance of $11,300 paid in cash).The old computer cost $9,000 and its accumulated depreciation was $5,500 as of the exchange date.Prepare the journal entry to record the exchange.

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Question 4

Revising estimates of the useful life or salvage value of a plant asset is referred to as a ____________________________________________.

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Question 5

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.

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Question 6

On April 1 of the current year,a company traded an old machine that originally cost $32,000 and that had accumulated depreciation of $24,000 for a similar new machine that had a cash price of $40,000.
a.Give the entry to record the exchange under the assumption that a $5,000 trade-in allowance was received and the balance of $35,000 was paid in cash.
b.Give the entry to record the exchange under the assumption that instead of a $5,000 trade-in allowance,a $12,500 trade-in allowance was received and the balance of $27,500 was paid in cash.

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Question 7

A company purchased mining property for $1,560,000.The property was estimated to contain 13,000,000 tons of ore.In the current year,the company removed and sold 247,000 tons of ore.Calculate the depletion expense for the current year.

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Question 8

The formula for calculating total asset turnover is _______________________________________.

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Question 9

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.

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Question 10

A company purchased mining property containing 7,350,000 tons of ore for $1,837,500.In 2012 it mined and sold 857,000 tons of ore and in 2013 it mined and sold 943,000 tons of ore.Calculate the depletion expense for 2012 and 2013.What was the book value of the property at the end of 2013?

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Question 11

During the current year,a company exchanged an old truck costing $58,000 with accumulated depreciation of $52,000 for a new truck.The new truck had a cash price of $80,000 and the company received a $16,000 trade-in allowance on the old truck with the balance of $64,000 paid in cash.Prepare the journal entry to record the exchange.

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Question 12

_____________________ is an estimate of an asset's value at the end of its useful life.

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Question 13

A company purchased a music distributor's collection of lyrics and songs for $1,425,000.The copyrights are expected to last another 30 years.Prepare the journal entry to record the amortization expense for the first year.

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Question 14

A company traded an old forklift for a new forklift,receiving a $10,500 trade-in allowance and paying the remaining $37,200 in cash.The old forklift cost $39,000 and straight-line accumulated depreciation of $27,200 had been recorded as of the exchange date under the assumption it would last five years and have a $5,000 salvage value.
a.What was the book value of the old forklift on the date of the exchange?
b.What amount of gain or loss (indicate which) should be recognized in recording the exchange?
c.What amount should be recorded as the cost of the new forklift?

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Question 15

A company purchased mining property that containing 15,000,000 tons of ore for $4,875,000.In 2012,the company mined and sold 789,000 tons of ore and in 2013,it mined and sold 1,235,000.Calculate the depletion expense for 2012 and 2013.

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Question 16

The three main factors in computing depreciation are: (1) ____________________, (2) ____________________, (3) ___________________.

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Question 17

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.

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Question 18

A company exchanged an old truck for a newer model.The old truck account had a cost of $76,000 and accumulated depreciation of $65,000 as of the exchange date.The new truck had a cash price of $84,000,but the company was given a $15,000 trade-in allowance and the balance of $69,000 was paid in cash.Prepare the journal entry to record the exchange.

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Question 19

_____________________ depreciation uses a depreciation rate that is a multiple of the straight-line rate and applies it to an asset's beginning-of-period book value.

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Question 20

The process of allocating the cost of a natural resource to the period when it is consumed is called _____________________.

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Quiz 8: Reporting and Analyzing Long-Term Assets