Question 1

Financial Statement data for the years ended December 31 for Parker Corporation is as follows:
2012 2011
Net Sales $2,595,600 $2,409,498
Fixed Assets:
Beginning of the year $901,070 $820,000
End of the year 829,330 901,070
a) Determine the Fixed Asset Turnover for 2012 and 2011.
b) Does the change in Fixed Asset Turnover from 2011 to 2012 indicate a favorable or unfavorable trend.?

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Question 2

Determine the depreciation, for the year of acquisition and for the following year, of a fixed asset acquired on October 1 for $500,000, with an estimated life of 5 years, and residual value of $50,000, using (a) the declining-balance method at twice the straight-line rate and (b) the straight-line method. Assume a fiscal year ending December 31.

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Question 3

Williams Company acquired machinery on July 1, 2009, at a cost of $130,000. The estimated useful life of the machinery was 10 years and the estimated residual value was $10,000. Williams uses the double-declining-balance method of depreciation. On October 1, 2012, Williams sold the equipment for $75,000.
1) Record the journal entry for the depreciation on this machinery for 2012.
2) Record the journal entry for the sale of the machinery.

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Question 4

Equipment was purchased on January 5, 2011, at a cost of $90,000. The equipment had an estimated useful life of 8 years and an estimated residual value of $8,000.

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Question 5

On October 1, Sebastian Company acquired new equipment with a fair market value of $458,000. Sebastian received a trade-in allowance of $92,000 on the old equipment of a similar type and paid cash of $366,000. The following information about the old equipment is obtained from the account in the equipment ledger: Cost, $336,000; accumulated depreciation on December 31, the end of the preceding fiscal year, $220,000; annual depreciation, $20,000. Assuming the exchange has commercial substance, journalize the entries to record: (a) the current depreciation of the old equipment to the date of trade-in and (b) the exchange transaction on October 1.

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Question 6

Machinery is purchased on July 1 of the current fiscal year for $240,000. It is expected to have a useful life of 4 years, or 25,000 operating hours, and a residual value of $15,000. Compute the depreciation for the last six months of the current fiscal year ending December 31 by each of the following methods:
 (a)straight-line
(b)declining-balance at twice the straight-line rate
(c)units-of-production (used for 1,600 hours during the current year) (Round the answer to the nearest dollar.)

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Question 7

A number of major structural repairs completed at the beginning of the current fiscal year at a cost of $1,000,000 are expected to extend the life of a building 10 years beyond the original estimate. The original cost of the building was $6,552,000, and it has been depreciated by the straight-line method for 25 years. Estimated residual value is negligible and has been ignored. The related accumulated depreciation account after the depreciation adjustment at the end of the preceding fiscal year is $4,550,000.
 (a)Whathas the amount of anmual depreciation been in past years?
(b)What was the original life estimate of the builcing?
(c)To what account should the $ \$ 1,000,000 $ be debited?
(d)What is the book value of the building after the extraordinary repairs have been made?
(e)What is the expected remaining life of the building after the extraordinary repairs have been made?
(f)What is the amoun of straight-line depreciation for the current year; assuning that the repairs were completed at the very beginring of  the current year? Round to the nearest dollar.

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Question 8

Equipment acquired on January 2, 2011 at a cost of $273,500 has an estimated useful life of eight years and an estimated residual value of $35,500.
Required:
 (1)What was the amual amount of depreciation for the years 2011,2012 , and 2013 , assuming the straight-line method of depreciation is used?

(2)What was the book value of the equipment on January 1,2014 ?
(3)Assuming that the equipment was sold on J anuary 2,2014 , for $ \$ 170,500 $, joumalize the entry to rec ord the sale.
(4)Assuming that the equipment had been sold on J amary 2,2014 , for $ \$ 189,000 $ inste ad of $ \$ 168,500 $, journalize the entry to record the sale.

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Question 9

Identify the following as a Fixed Asset (FA), or Intangible Asset (IA), or Natural Resource (NR), or Neither (N)
 (a)computer
(b)patent
(c)oil reserve
(d)goodwill
(e)U.S. Tressuly note
(f)land used for employe parlang
(g)gold mine

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Question 10

Solare Company acquired mineral rights for $60,000,000. The diamond deposit is estimated at 6,000,000 tons. During the current year, 2,300,000 tons were mined and sold.
 a.Determine the depletion rate.
b.Detemine the amount of depletion expense for the current year:
c.Joumalize the adjusting entry to recognize the depletion expense.

Accepted Answer

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Question 11

On December 31, Bowman Company estimated that goodwill of $80,000 was impaired. In addition, a patent with an estimated useful economic life of 10 years was acquired for $252,000 on June 1.
Required:
(1) Journalize the adjusting entry on December 31 for the impaired goodwill.
(2) Journalize the adjusting entry on December 31 for the amortization of the patent rights.

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Question 12

Convert each of the following estimates of useful life to a straight-line depreciation rate, stated as a percentage.
 (1)2 years
(2)8 years
(3)10 years
(4)20 years
(5)25 years
(6)40 years
(7)50 years

Accepted Answer

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Question 13

Fill in the missing numbers using the formula for Fixed Asset Turnover:
 $\begin{array}{|c|c|c|c|c|}
\hline \text { Compary D } & \text { Company C } & \text { Company B } & \text { Company A } & \
\hline & \$ 9000,000 & \$ 720,000 & \$ 5,000,000 & \text { Net Sales } \
\hline \$ 380,000 & 10 & \$ 275,000 & \$ 450,000 & \text { Beginning Fixed Assets } \
\hline \$ 420,000 & \$ 310,000 & ? & \$ 800,000 & \text { Ending Fixed Assets } \
\hline 2.6 \text { times } & 3 \text { times } & 2.4 \text { times } & \text { ? } & \text { Fixed Asset Tunnover } \
\hline
\end{array}$

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Question 14

XYZ Co. incurred the following costs related to the office building used in operating its sports supply company:
 a.Replaced a broken window.
b.Replaced the rof that had been on the building 23 years.
c.Serviced all the air conclitioners before sumuner started.
d.Replaced the air conditionerswith refrigerated air conditioners in the customer service areas.
e.Added a warehouse to the back of the building.
f.Repainted the interior walls.
g.Installed window shutters on all windows. Classify each of the costs as a capital expenditure or a revenue expenditure. For those costs identified as capital expenditures, classify each as an additional or replacement component.

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Question 15

For each of the following fixed assets, determine the depreciation expense and the book value for the dates requested:
Disposal date is N/A if asset is still in use.
Method: SL = Straight Line; DDB = Double Declining Balance
Assume the estimated life was 5 years for each asset.
 $\begin{array}{|c|l|l|l|l|l|l|}
\hline \text { Depr Expense 2011 } & \text { Depr Method } & \text { Disposal date } & \text { Purchase Date } & \text { Residual Value } & \text { Cost } & \text { Item } \
\hline & \text { SL } & \text { N/A } & 7 / 1 / 2011 & \$ 4,000 & \$ 40,000 & \text { A } \
\hline & \text { SL } & \text { S/31/2011 } & 1 / 1 / 2009 & \$ 5,000 & \$ 50,000 & \text { B } \
\hline& \text { DDB } & \text { N/A } & 10 / 1 / 2011 & \$ 2,000 & \$ 60,000 & \text { C } \
\hline & \text { DDB } & 4 / 1 / 2011 & 1 / 1 / 2010 & \$ 10,000 & \$ 80,000 & \text { D } \
\hline & & & & & & \
\hline
\end{array}$

Accepted Answer

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Question 16

Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of 5 years, or 14,000 operating hours, and a residual value of $10,000. Compute the depreciation for the first and second years of use by each of the following methods:
 (a)straight-line
(b)unit s-of-production (1,200 hours first year; 2,250 hours second year)
(c)declining-balance at twice the straight-line rate (Round the answer to the nearest dollar.)

Accepted Answer

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Question 17

Identify each of the following expenditures as chargeable to (a) Land, (b) Land Improvements, (c) Buildings, (d) Machinery and Equipment, or (e) other account.
 Cost of paving parking are a for employees and customers.
Insurance duing constuction of building:
Interest incured on lo an during construction of building:
Fee paid for installation of equipment.
Special foundation for new equipment acquired.
Insurance on new equipment while in transit.
Freight charges on new equipment.
Cost of repairing vandalism damage to equipment during installation.
Sales tax on new equipment.
Cost incure din repaing damage resulting from installation of new equipment.
Cost of land fill for building site.
Cost of lubric ating oil purchased for periodic oil changes for equipment.
Parking lot lighting
Inst alling a fence around the parking lot
Repainting the trim on a building:
Special assessment paid to city for extension of water main to property.
Cost of razing and removing the old building on property acquired for a building site.
D dincuent real estate taxes assumed by purchass on property accuired for a bualding site.
Attomey's fee for title search.
Architect's fee for building plans and supervision of construction.

Accepted Answer

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Question 18

Journalize each of the following transactions:
 (a)A wing costing $ \$ 1,250,000 $ was added to the building A new motgage was issued for the cost. 
(b)Equipment was upgrade d to increase it capacity to produce widgets. The upgrade cost of $ \$ 13,000 $ was paid in cash
(c)A major overhaul costing $ \$ 7,000 $ on a machine increased the useful life by 2 years. The payment was made in cash

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 (a)A...

Question 19

Equipment costing $80,000 with a useful life of 10 years and a residual value of $8,000 has been depreciated for 6 years by the straight-line method. Assume a fiscal year ending December 31.

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Question 20

Falcon Company acquired an adjacent lot to construct a new warehouse, paying $30,000 and giving a short-term note for $370,000. Legal fees paid were $11,425, delinquent taxes assessed were $12,000, and fees paid to remove an old building from the land were $18,500. Materials salvaged from the demolition of the building were sold for $4,500. A contractor was paid $910,000 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet and show your work.

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Quiz 9: Fixed Assets and Intangible Assets

Equipment was purchased on January 5, 2011, at a cost of $90,000. The equipment had an estimated useful life of 8 years and an estimated residual value of $8,000.

Identify the following as a Fixed Asset (FA), or Intangible Asset (IA), or Natural Resource (NR), or Neither (N) (a)computer (b)patent (c)oil reserve (d)goodwill (e)U.S. Tressuly note (f)land used for employe parlang (g)gold mine

Convert each of the following estimates of useful life to a straight-line depreciation rate, stated as a percentage. (1)2 years (2)8 years (3)10 years (4)20 years (5)25 years (6)40 years (7)50 years

Equipment costing $80,000 with a useful life of 10 years and a residual value of $8,000 has been depreciated for 6 years by the straight-line method. Assume a fiscal year ending December 31.