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Chapter 10--Fixed Assets and Intangible Assets
Student: ___________________________________________________________________________
1. Long-lived assets that are intangible in nature, used in the operations of the business, and not held for sale in
the ordinary course of business are called fixed assets.
True False
2. The acquisition costs of property, plant, and equipment should include all normal, reasonable and necessary
costs to get the asset in place and ready for use.
True False
3. When land is purchased to construct a new building, the cost of removing any structures on the land should
be charged to the building account.
True False
4. Land acquired as a speculation is reported under Investments on the balance sheet.

True False
5. To a major resort, timeshare properties would be classified as property, plant and equipment.
True False
6. 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.
True False
7. The cost of repairing damage to a machine during installation is debited to a fixed asset account.
True False
8. During construction of a building, the cost of interest on a construction loan should be charged to an expense
account.
True False
9. The cost of computer equipment does not include the consultant's fee to supervise installation of the
equipment.
True False
10. 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.
True False
11. Capital expenditures are costs of acquiring, constructing, adding, or replacing property, plant and
equipment.
True False
12. The cost of new equipment is called a revenue expenditure because it will help generate revenues in the
future.
True False
13. Expenditures that increase operating efficiency or capacity for the remaining useful life of a fixed asset are
betterments.
True False
14. The cost of replacing an engine in a truck is an example of ordinary maintenance.

True False
15. A capital lease is accounted for as if the asset has been purchased.
True False
16. An operating lease is accounted for as if the lessee has purchased the asset.
True False
17. An intangible asset is one that has a physical existence.

True False
18. A capitalized asset will appear on the balance sheet as a long term asset.
True False
19. Long lived assets held for sale are classified as fixed assets.
True False
20. Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which
it was intended.
True False
21. The normal balance of the accumulated depreciation account is debit.

True False
22. As a company records depreciation expense for a period of time a corresponding cash inflow from investing
activities is reported on the statement of cash flows.
True False
23. All property, plant, and equipment assets are depreciated over time.
True False
24. The book value of a fixed asset reported on the balance sheet represents its market value on that date.
True False
25. The depreciable cost of a building is the same as its acquisition cost.
True False
26. It is necessary for a company to use the same depreciation method for all of its depreciable assets.
True False
27. It is not necessary for a company to use the same depreciation method for financial statements and for
determining income taxes.
True False
28. An estimate of the amount which an asset can be sold at the end of its useful life is called residual value.
True False
29. The units of production depreciation method provides a good match of expenses against revenue.
True False
30. Once the useful life of a depreciable asset has been estimated and the amount to be depreciated each year
has been determined, the amounts can not be changed.
True False
31. Residual value is not incorporated in the initial calculations for double-declining-balance depreciation.
True False
32. The double-declining-balance method is an accelerated depreciation method.

True False
33. The double declining balance depreciation method calculates depreciation each year by taking twice the
straight line rate times the book value of the asset at the beginning of each year.
True False
34. When minor errors occur in the estimates used in the determination of depreciation, the amounts recorded
for depreciation expense in the past should be corrected.
True False
35. The amount of depreciation expense for the first full year of use of a fixed asset costing $95,000, with an
estimated residual value of $5,000 and a useful life of 5 years, is $19,000 by the straight-line method.
True False
36. The amount of depreciation expense for a fixed asset costing $95,000, with an estimated residual value of
$5,000 and a useful life of 5 years or 20,000 operating hours, is $21,375 by the units-of-production method
during a period when the asset was used for 4,500 hours.
True False
37. The amount of the depreciation expense for the second full year of use of a fixed asset costing $100,000,
with an estimated residual value of $5,000 and a useful life of 4 years, is $25,000 by the declining-balance
method at twice the straight-line rate.
True False
38. When depreciation estimates are revised, all years of the asset’s life are affected.
True False
39. For income tax purposes most companies use an accelerated deprecation method called double declining
balance.
True False
40. Assets may be grouped according to common traits and depreciated by using a single composite rate.
True False
41. Regardless of the depreciation method, the amount that will be depreciated during the life of the asset will
be the same.
True False
42. Revising depreciation estimates does affect the amounts of depreciation expense recorded in past periods.
True False
43. Capital expenditures are costs that are charged to Stockholders' Equity accounts.
True False
44. Though a piece of equipment is still being used, the equipment should be removed from the accounts if it
has been fully depreciated.
True False
45. When selling a piece of equipment for cash, a loss will result when the proceeds of the sale are less than the
book value of the asset.
True False
46. When a property, plant, and equipment asset is sold for cash, any gain or loss on the asset sold should be
recorded.
True False
47. Ordinary gains from the sale of fixed assets should be reported in the other income section of the income
statement.
True False
48. A gain can be realized when a fixed asset is discarded.

True False
49. When old equipment is traded in for a new equipment, the difference between the list price and the trade in
allowance is called boot.
True False
50. When a plant asset is traded for another similar asset, losses on the asset traded are not recognized.
True False
51. When exchanging equipment, if the trade-in allowance is greater than the book value a loss results.
True False
52. If a fixed asset with a book value of $10,000 is traded for a similar fixed asset, and a trade-in allowance of
$15,000 is granted by the seller, if the transaction is deemed to have commercial substance, the buyer would
report a gain on disposal of fixed assets of $5,000.
True False
53. The entry to record the disposal of fixed assets will include a credit to accumulated depreciation.
True False
54. Both the initial cost of the asset and the accumulated depreciation will be taken off the books with the
disposal of the asset.
True False
55. Minerals removed from the earth are classified as intangible assets.
True False
56. The method used to calculate the depletion of a natural resource is the straight line method.
True False
57. Intangible assets differ from property, plant and equipment assets in that they lack physical substance.
True False
58. The transfer to expense of the cost of intangible assets attributed to the passage of time or decline in
usefulness is called amortization.
True False
59. The cost of a patent with a remaining legal life of 10 years and an estimated useful life of 7 years is
amortized over 10 years.
True False
60. Costs associated with normal research and development activities should be treated as intangible assets.
True False
61. Patents are exclusive rights to manufacture, use, or sell a particular product or process.
True False
62. When a major corporation develops its own trademark and over time it becomes very valuable, the
trademark may not be shown on their balance sheet due to lack of a material cost.
True False
63. When a company establishes an outstanding reputation and has a competitive advantage because of it, the
company should record goodwill on its financial statements.
True False
64. The difference between the balance in a fixed asset account and its related accumulated depreciation
account is the asset's book value.
True False
65. When a seller allows a buyer an amount for old equipment that is traded in for new equipment of similar
use, this amount is known as boot.
True False
66. An exchange is said to have commercial substance if future cash flows remain the same as a result of the
exchange.
True False
67. A characteristic of a fixed asset is that it is

A. intangible
B. used in the operations of a business
C. held for sale in the ordinary course of the business
D. a short-term investment
68. Land acquired so it can be resold in the future is listed in the balance sheet as a(n)
A. fixed asset
B. current asset
C. investment
D. intangible asset
69. Which of the following should be included in the acquisition cost of a piece of equipment?
A. transportation costs
B. installation costs
C. testing costs prior to placing the equipment into production
D. all are correct
70. Which of the following is included in the cost of constructing a building?
A. insurance costs during construction
B. cost of paving parking lot
C. cost of repairing vandalism damage during construction
D. cost of removing the demolished building existing on the land when it was purchased
71. Which of the following is included in the cost of land?

A. cost of paving a parking lot
B. brokerage commission
C. outdoor parking lot lighting attached to the land
D. fences on the land
72. Accumulated Depreciation

A. is used to show the amount of cost expiration of intangibles
B. is the same as Depreciation Expense
C. is a contra asset account
D. is used to show the amount of cost expiration of natural resources
73. A building with an appraisal value of $154,000 is made available at an offer price of $172,000. The
purchaser acquires the property for $40,000 in cash, a 90-day note payable for $45,000, and a mortgage
amounting to $75,000. The cost basis recorded in the buyer's accounting records to recognize this purchase is
A. $154,000
B. $172,000
C. $160,000
D. $120,000
74. A used machine with a purchase price of $77,000, requiring an overhaul costing $8,000, installation costs of
$5,000, and special acquisition fees of $3,000, would have a cost basis of
A. $93,000
B. $90,000
C. $82,000
D. $85,000
75. A new machine with a purchase price of $109,000, with transportation costs of $12,000, installation costs of
A. $114,000
B. $126,000
C. $121,000
D. $132,000
76. Expenditures that add to the utility of fixed assets for more than one accounting period are
A. committed expenditures
B. revenue expenditures
C. utility expenditures
D. capital expenditures
77. A capital expenditure results in a debit to

A. an expense account
B. a capital account
C. a liability account
D. an asset account
78. Which of the following below is an example of a capital expenditure?

A. cleaning the carpet in the front room
B. tune-up for a company truck
C. replacing an engine in a company car
D. replacing all burned-out light bulbs in the factory
79. In a lease contract, the party who legally owns the asset is the
A. lessee
B. lessor
C. operator
D. banker
80. All leases are classified as either

A. capital leases or long-term leases
B. capital leases or operating leases
C. operating leases or current leases
D. long-term leases or current leases
81. The journal entry for recording an operating lease payment would
A. be a memo entry only
B. debit the fixed asset and credit Cash
C. debit an expense and credit Cash
D. debit a liability and credit Cash
82. When determining whether to record an asset as a fixed asset, what two criteria must be met?
A. Must be an investment and must be long lived.
B. Must be long lived and must use the asset in a productive manner.
C. Must be short lived and must be a tangible asset.
D. Must be a tangible asset and must be an investment.
83. Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two
categories
A. salvage and functional
B. physical and functional
C. residual and salvage
D. functional and residual
84. A fixed asset's estimated value at the time it is to be retired from service is called
A. book value
B. residual value
C. market value
D. carrying value
85. All of the following below are needed for the calculation of straight-line depreciation except
A. cost
B. residual value
C. estimated life
D. units produced
86. The method of determining depreciation that yields successive reductions in the periodic depreciation
charge over the estimated life of the asset is
A. units-of-production
B. declining-balance
C. straight-line
D. time-valuation
87. When the amount of use of a fixed asset varies from year to year, the method of determining depreciation
expense that best matches allocation of cost with revenue is
A. declining-balance
B. straight-line
C. units-of-production
D. MACRS
88. A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5
years or 15,000 hours. It is to be depreciated by the units-of-production method. What is the amount of
depreciation for the second full year, during which the machine was used 5,000 hours?
A. $ 5,000
B. $35,000
C. $21,000
D. $45,000
89. Equipment with a cost of $220,000 has an estimated residual value of $30,000 and an estimated life of 10
years or 19,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for
the first full year, during which the equipment was used 2,100 hours?
A. $19,000
B. $21,000
C. $22,000
D. $30,000
90. A machine with a cost of $75,000 has an estimated residual value of $5,000 and an estimated life of 4 years
or 18,000 hours. What is the amount of depreciation for the second full year, using the double declining-balance
method?
A. $17,500
B. $37,500
C. $18,750
D. $16,667
91. The most widely used depreciation method is

A. straight-line
B. double-declining-balance
D. units-of-production or double-declining-balance
92. Equipment with a cost of $160,000, an estimated residual value of $40,000, and an estimated life of 15 years
was depreciated by the straight-line method for 4 years. Due to obsolescence, it was determined that the useful
life should be shortened by 3 years and the residual value changed to zero. The depreciation expense for the
current and future years is
A. $11,636
B. $16,000
C. $11,000
D. $8,000
93. The depreciation method that does not use residual value in calculating the first year's depreciation expense
is
A. straight-line
B. units-of-production
C. double-declining-balance
D. none of the above
94.
If a fixed asset, such as a computer, were purchased on January 1st for $3,750 with an estimated life of 3 years
and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation
is:
(Note: EOM indicates the last day of each month.)
A. EOM Depreciation Expense 100
Accumulated Depreciation 100
B. EOM Depreciation Expense 1,200
Accumulated Depreciation 1,200
C. EOM Accumulated Depreciation 1,200
Depreciation Expense 1,200
D. EOM Accumulated Depreciation 100
Depreciation Expense 100
95. The proper journal entry to purchase a computer costing $975 on account on January 2 to be utilized within
the business would be:
A. Jan 2 Office Supplies 975
Accounts Payable 975
B. Jan 2 Office Equipment 975
C. Jan 2 Office Supplies 975
Accounts Receivable 975
D. Jan 2 Office Equipment 975
96. Residual value is also known as all of the following except

A. scrap value
B. trade in value
C. salvage value
D. net book value
97. The formula for depreciable cost is
A. initial cost + residual value
B. initial cost - residual value
C. initial cost - accumulated depreciation
D. depreciable cost = initial cost
98. Expected useful life is

A. calculated when the asset is sold.
B. estimated at the time that the asset is placed in service.
C. determined each year that the depreciation calculation is made.
D. none of the answers are correct.
99. The calculation for annual depreciation using the straight-line depreciation method is
A. initial cost / estimated useful life
B. depreciable cost / estimated useful life
C. depreciable cost * estimated useful life
D. initial cost * estimated useful life
100. The calculation for annual depreciation using the units-of-production method is
A. (initial cost/estimated output) * the actual yearly output
B. (depreciable cost / yearly output) * estimated output
C. depreciable cost / yearly output
D. (depreciable cost / estimated output) * the actual yearly output
101. Computer equipment was acquired at the beginning of the year at a cost of $57,000 that has an estimated
residual value of $9,000 and an estimated useful life of 5 years. Determine the 2nd year’s depreciation using
straight-line depreciation.
A. $13,200
B. $19,200
C. $ 9,600
D. $ 9,000
102. Which of the following is true?
A. If using the double-declining-balance the total amount of depreciation expense during the life of the asset
will be the highest.
B. If using the units-of-production method, it is possible to depreciate more than the depreciable cost.
C. If using the straight line method, the amount of depreciation expense during the first year is higher than that
of the double-declining-balance.
D. Regardless of the depreciation method, the amount of total depreciation expense during the life of the asset
will be the same.
103. 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.
A. $25,000
B. $11,000
C. $24,000
D. $24,500
104. A fixed asset with a cost of $52,000 and accumulated depreciation of $47,500 is traded for a similar asset
priced at $60,000 in a transaction with commercial substance. Assuming a trade-in allowance of $5,000, the
cost basis of the new asset is
A. $54,000
B. $59,500
C. $60,000
D. $60,500
priced at $50,000. Assuming a trade-in allowance of $4,000, the cost basis of the new asset is
A. $54,000
B. $45,000
C. $51,000
D. $50,000
priced at $60,000. Assuming a trade-in allowance of $3,000, the recognized loss on the trade is
A. $3,000
B. $4,500
C. $ 500
D. $1,500
107. A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 is sold for $3,500. What is
the amount of the gain or loss on disposal of the fixed asset?
A. $2,000 loss
B. $1,500 loss
C. $3,500 gain
D. $2,000 gain
108. The Bacon Company acquired new machinery with a price of $15,200 by trading in similar old machinery
and paying $12,700. The old machinery originally cost $9,000 and had accumulated depreciation of
$5,000. In recording this transaction, Bacon Company should record
A. the new machinery at $16,700
B. the new machinery at $12,700
C. a gain of $1,500
D. a loss of $1,500
109. When a company discards machinery that is fully depreciated, this transaction would be recorded with the
following entry
A. debit Accumulated Depreciation; credit Machinery
B. debit Machinery; credit Accumulated Depreciation
C. debit Cash; credit Accumulated Depreciation
D. debit Depreciation Expense; credit Accumulated Depreciation
110. When a company sells machinery at a price equal to its book value, this transaction would be recorded
with an entry that would include the following:
A. debit Cash and Accumulated Depreciation; credit Machinery
B. debit Machinery; credit Cash and Accumulated Depreciation
C. debit Cash and Machinery; credit Accumulated Depreciation
D. debit Cash and Depreciation Expense; credit Accumulated Depreciation
111. When a company exchanges machinery and receives a trade-in allowance greater than the book value, this
transaction would be recorded with the following entry (assuming the exchange was considered to have
commercial substance):
A. debit Machinery and Accumulated Depreciation; credit Machinery, Cash, and Gain on Disposal
B. debit Machinery and Accumulated Depreciation; credit Machinery and Cash
D. debit Cash and Machinery; credit Accumulated Depreciation and Machinery
112. When a company exchanges machinery and receives a trade-in allowance less than the book value, this
transaction would be recorded with the following entry:
A. debit Machinery and Accumulated Depreciation; credit Machinery and Cash
B. debit Cash and Machinery; credit Accumulated Depreciation
C. debit Cash and Machinery; credit Accumulated Depreciation and Machinery
D. debit Machinery, Accumulated Depreciation, and Loss on Disposal; credit Machinery and Cash
113. 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.
A. Accumulated Depreciation Dr. $310,000
B. Loss on Disposal of Asset Dr. $260,000
C. Equipment Cr. $310,000
D. Gain on Disposal of Asset Cr. $50,000
114. On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the
end of the year. The company found a company that is willing to buy the equipment for $50,000. What is the
amount of the gain or loss on this transaction?
A. Gain of $50,000
B. Loss of $50,000
C. No gain or loss
D. Cannot be determined
A. Gain of $20,000
B. Loss of $30,000
C. No gain or loss
A. Cannot be determined
B. No gain or loss
C. Gain of $ 5,000
D. Gain of $55,000
117. 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?
A. Loss of $11,000
B. Gain of $11,000
C. Loss of $19,000
D. No loss or gain will be recorded.
118. When a company replaces a component of property, plant and equipment, which statement below does not
account for one of the steps in the process?
A. book value of the replaced component is written off to depreciation expense
B. the asset cost of the replaced component is credited
C. any cost to remove the old component is charged to expense
D. the identifiable direct costs associated with the new component are capitalized
119. The accumulated depletion account is

B. an intangible asset account
C. reported on the income statement as other expense
D. reported on the balance sheet as a deduction from the cost of the mineral deposit
120. The process of transferring the cost of metal ores and other minerals removed from the earth to an expense
account is called
A. depletion
B. deferral
C. amortization
D. depreciation
121. The Weber Company purchased a mining site for $1,750,000 on July 1, 2014. The company expects to
mine ore for the next 10 years and anticipates that a total of 400,000 tons will be recovered. The estimated
residual value of the property is $150,000. During 2014 the company extracted 6,500 tons of ore. The
depletion expense for 2014 is
A. $17,500
B. $16,000
C. $26,000
D. $15,000
122. Expenditures for research and development are generally recorded as
A. current operating expenses
B. assets and amortized over their estimated useful life
C. assets and amortized over 40 years
D. current assets
123. The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of
intangible assets is
A. amortization
B. depletion
C. depreciation
D. allocation
124. Xtra Company purchased goodwill from Argus for $96,000. Argus had developed the goodwill over 12
years. How much would Xtra amortize the goodwill for its first year?
A. $7,000
B. $ 8,000
C. Goodwill is not amortized.
D. Not enough information.
125. Which intangible assets are amortized over their useful life?
A. trademarks
B. goodwill
C. patents
D. all of the above
126. The exclusive right to use a certain name or symbol is called a

A. goodwill
B. patent
C. trademark
D. copyright
127. Fixed assets are ordinarily presented in the balance sheet

A. at current market values
B. at replacement costs
C. at cost less accumulated depreciation
D. in a separate section along with intangible assets
128. Machinery was purchased on January 1, 2010 for $51,000. The machinery has an estimated life of 7 years
and an estimated salvage value of $9,000. Double-declining balance depreciation for 2011 would be
A. $10,929
B. $6,000
C. $10,500
D. $10,408
129. On June 1, 2014, Aaron Company purchased equipment at a cost of $120,000 that has a depreciable cost of
$90,000 and an estimated useful life of 3 years and 30,000 hours.
Using straight line depreciation, calculate depreciation expense for the first year.
A. $17,500
B. $30,000
C. $12,500
D. $40,000
Using straight line depreciation, calculate depreciation expense for the second year.
A. $17,500
B. $30,000
C. $12,500
D. $40,000
Using straight line depreciation, calculate depreciation expense for the last year.
A. $17,500
B. $30,000
C. $12,500
D. $40,000
132. What is the cost of the land, based upon the following data?
Land purchase price $178,000

Broker's commission 15,000
Payment for the demolition
and removal of existing building 5,000
Cash received from the sale of materials
salvaged from the demolished building 2,000
133. Comment on the validity of the following statements. "As an asset loses its ability to provide services,
cash needs to be set aside to replace it. Depreciation accomplishes this goal."
134. On April 15, Compton Co. paid $2,800 to upgrade a delivery truck and $125 for an oil change. Journalize
the entries for the upgrade to delivery truck and oil change expenditures.
residual value of $3,800 and an estimated useful life of 8 years. Determine the (a) depreciable cost, (b)
straight-line rate, and (c) annual straight-line depreciation.
136. A double-declining balance rate for calculating depreciation expense is determined by doubling the
straight-line rate. Assuming that an asset has a useful life of 25 years, determine the rate to be used if using the
double-declining balance method.
137. Copy equipment was acquired at the beginning of the year at a cost of $72,000 that has an estimated
residual value of $9,000 and an estimated useful life of 5 years. It is estimated that the machine has an
estimated 1,000,000 copies. This year 315,000 copies were made. Determine the (a) depreciable cost, (b)
depreciation rate, and (c) the units-of-production depreciation for the year.
138. A machine costing $57,000 with a 6-year life and $54,000 depreciable cost was purchased January 1,
2015. Compute the yearly depreciation expense using straight-line depreciation.
139. A machine costing $85,000 with a 5-year life and $5,000 residual value was purchased January 2,
2011. Compute depreciation for each of the five years, using the declining-balance method at twice the
straight-line rate.
residual value of $3,000 and an estimated useful life of 5 years. Determine the (a) depreciable cost (b)
double-declining-balance rate, and (c) double-declining-balance depreciation for the first year.
141. An asset was purchased for $58,000 and originally estimated to have a useful life of 10 years with a
residual value of $3,000. After two years of straight line depreciation, it was determined that the remaining
useful life of the asset was only 2 years with a residual value of $2,000.
a) Determine the amount of the annual depreciation for the first two years.
b) Determine the book value at the end of the 2nd year.
c) Determine the depreciation expense for each of the remaining years after revision.
142. Equipment was acquired at the beginning of the year at a cost of $75,000. The equipment was depreciated
using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of
$7,500.
a) What was the depreciation expense for the first year?

b) Assuming the equipment was sold at the end of the second year for $59,000, determine the gain or loss on sale of the equipment.
c) Journalize the entry to record the sale.
143. On the first day of the fiscal year, a new walk-in cooler with a list price of $58,000 was acquired in
exchange for an old cooler and $44,000 cash. The old cooler had a cost of $25,000 and accumulated
depreciation of $16,000.
Assume the transaction has commercial substance.
a) Determine the gain to be recorded on the exchange.

b) Journalize the entry to record the exchange.
144. 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. Determine the amount of depletion expense for the current year.
c. Journalize the adjusting entry to recognize the depletion expense.
145. Falcon Company acquired an adjacent lot to construct a new warehouse, paying $40,000 and giving a
short-term note for $410,000. Legal fees paid were $13,275, delinquent taxes assessed were $14,500, and fees
paid to remove an old building from the land were $15,800. Materials salvaged from the demolition of the
building were sold for $6,800. A contractor was paid $890,000 to construct a new warehouse. Determine the
cost of the land to be reported on the balance sheet and show your work.
146. 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
147. Prior to adjustment at the end of the year, the balance in Trucks is $300,900 and the balance in
Accumulated Depreciation-Trucks is $88,200. Details of the subsidiary ledger are as follows:
Truck No. Cost Estimated Residual Value Estimated Useful Life Accumulated Depreciation at Miles Operated During
Beginning of Year Year
1 $100,000 $13,000 300,000 -- 30,000
2 72,900 9,900 300,000 $60,000 25,000
3 38,000 3,000 200,000 8,050 45,000
4 90,000 13,000 200,000 20,150 40,000
Required:
(1) Determine the depreciation rates per mile and the amount to be credited to the accumulated depreciation section of each of the
subsidiary accounts for the miles operated during the current year.
(2) Journalize the entry to record depreciation for the year.
148. Champion Company purchased and installed carpet in its new general offices on March 30 for a total cost
of $18,000. The carpet is estimated to have a 15-year useful life and no residual value.
a. Prepare the journal entries necessary for recording the purchase of the new carpet.
b. Record the December 31 adjusting entry for the partial-year depreciation expense for the carpet assuming that Champion Company
uses the straight-line method.
149. 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 annual 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 January 2, 2014, for $170,500, journalize the entry to record the sale.
(4) Assuming that the equipment had been sold on January 2, 2014, for $189,000 instead of $168,500, journalize the entry to record
the sale.
150. Chasteen Company acquired mineral rights for $9,100,000. The mineral deposit is estimated at 65,000,000
Required:
(1) Determine the amount of depletion expense for the current year.
(2) Journalize the adjusting entry to recognize the depletion expense.

151. Icon Company acquired patent rights on January 1, 2009 for $1,125,000. The patent has a useful life equal
to its legal life of 15 years. On January 2, 2012, Icon successfully defended the patent in a lawsuit at a cost of
$90,000.
Required:
(1) Determine the patent amortization expense for the current year ended December 31, 2012.
(2) Journalize the adjusting entry to recognize the amortization.
152. The following information was taken from a recent annual report of Harrison Company: (in millions)
2012 2011
Land and buildings $726 $361
Machinery, equipment, and internal-use software 595 470
Office furniture and equipment 94 81
Other fixed assets related to leases 760 569
Accumulated depreciation and amortization 894 644
Required:
(1) Compute the book value of the fixed assets for the 2012 and 2011 and explain the differences, if any.
(2) Would you normally expect the book value of fixed assets to increase or decrease during the year?
153. 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.
154. 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.
155. 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.
Item Cost Residual Value Purchase Date Disposal date Depr Method Depr Expense 2011
A $40,000 $4,000 7/1/2011 N/A SL
B $50,000 $5,000 1/1/2009 8/31/2011 SL
C $60,000 $2,000 10/1/2011 N/A DDB
D $80,000 $10,000 1/1/2010 4/1/2011 DDB
156. 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.?
157. Fill in the missing numbers using the formula for Fixed Asset Turnover:
Company A Company B Company C Company D

Net Sales $5,000,000 $720,000 $900,000 ?
Beginning Fixed Assets $450,000 $275,000 ? $380,000
Ending Fixed Assets $800,000 ? $310,000 $420,000
Fixed Asset Turnover ? 2.4 times 3 times 2.6 times
158. 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.
159. 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.
After using the equipment for 3 years, the useful life was revised to a total of 10 years and the residual value
was reduced to $2,004.
Determine the straight-line depreciation expense for the year 2014 and following years.
160. Identify each of the following expenditures as chargeable to (a) Land, (b) Land Improvements, (c)
Buildings, (d) Machinery and Equipment, or (e) other account.
(1) Cost of paving parking area for employees and customers.

(2) Insurance during construction of building.
(3) Interest incurred on loan during construction of building.
(4) Fee paid for installation of equipment.
(5) Special foundation for new equipment acquired.
(6) Insurance on new equipment while in transit.
(7) Freight charges on new equipment.
(8) Cost of repairing vandalism damage to equipment during installation.
(9) Sales tax on new equipment.
(10) Cost incurred in repairing damage resulting from installation of new equipment.
(11) Cost of land fill for building site.
(12) Cost of lubricating oil purchased for periodic oil changes for equipment.
(13) Parking lot lighting.
(14) Installing a fence around the parking lot.
(15) Repainting the trim on a building.
(16) Special assessment paid to city for extension of water main to property.
(17) Cost of razing and removing the old building on property acquired for a building site.
(18) Delinquent real estate taxes assumed by purchaser on property acquired for a building site.
(19) Attorney's fee for title search.
(20) Architect's fee for building plans and supervision of construction.
161. 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. Treasury note
(f) land used for employee parking
(g) gold mine
162. 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) What has the amount of annual depreciation been in past years?
(b) What was the original life estimate of the building?
(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 amount of straight-line depreciation for the current year, assuming that the repairs were completed at the very beginning of
the current year? Round to the nearest dollar.
163. Journalize each of the following transactions:
(a) A wing costing $2,345,000 was added to the building. A new mortgage was issued for the cost.
(b) Equipment was upgraded to increase its capacity to produce widgets. The upgrade cost of $11,500 was paid in cash.
(c) A major overhaul costing $8,000 on a machine increased the useful life by 4 years. The payment was made in cash.
164. 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 roof that had been on the building 23 years.
c. Serviced all the air conditioners before summer started.
d. Replaced the air conditioners with 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.
165. 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) units-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.)
166. 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)

167. 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.
168. 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.
(a) What is the book value at the end of the sixth year of use?
(b) If early in the seventh year it is estimated that the remaining useful life is 5 years (instead of 4) and the residual value is $6,000,
what is the amount of depreciation for the seventh year?
169. Golden Sales has bought $135,000 in fixed assets on January 1st associated with sales equipment. The
residual value of these assets is estimated at $10,000 after they service their 4 year service life. Golden Sales
managers want to evaluate the options of depreciation.
(a) Compute the annual straight-line depreciation and provide the sample depreciation journal entry to be posted
at the end of each of the years.
(b) Write the journal entries for each year of the service life for these assets using the double- declining balance
method.
170. On July 1st, Harding Construction purchases a bulldozer for $228,000. The equipment has a 8 year life
with a residual value of $16,000. Harding uses straight-line depreciation.
(a) Calculate the depreciation expense and provide the journal entry for the first year ending December 31st.
(b) Calculate the third year’s depreciation expense and provide the journal entry for the third year ending
December 31st.
(c) Calculate the last year’s depreciation expense and provide the journal entry for the last year.
171. On July 1st, Hartford Construction purchases a bulldozer for $228,000. The equipment has a 9 year life
with a residual value of $16,000. Hartford uses units-of-production method depreciation and the bulldozer is
expected to yield 26,500 operating hours.
(a) Calculate the depreciation expense per hour of operation.
(b) The bulldozer is operated 1,250 hours in the first year, 2,755 hours in the second year, and 1,225 hours in
the third year of operations. Journalize the depreciation expense for each year.
172. Eagle Country Club has acquired a lot to construct a clubhouse. Eagle had the following costs related to
the construction:
Architects’ Fees $45,000

Construction Labor 80,000
Engineers’ Fees 15,000
Fences around building 9,000
Grading and leveling 10,000
Insurance costs incurred during construction 7,000
Interest on money borrowed for construction 5,000
Land 73,000
Building Materials 237,000
Sales Taxes 6,000
Trees and Shrubs 6,000
Determine the cost of the Club House to be reported on the balance sheet.
173. A copy machine acquired with a cost of $1,410 has an estimated useful life of 4 years. It is also expected
to have a useful operating life of 13,350 copies. Assuming that it will have a residual value of $75, determine
the depreciation for the first year by the
a. straight-line method
b. double declining-balance method
c. production method (4,500 copies were made the first year)
174. A copy machine acquired on March 1, 2011 with a cost of $1,410 has an estimated useful life of 3
years. Assuming that it will have a residual value of $150, determine the depreciation for the first and second
year by the straight-line method.
175. A copy machine acquired on March 1, 2011 with a cost of $705 has an estimated useful life of 4
years. Assuming that it will have a residual value of $125, determine the depreciation for the first year by the
double-declining-balance method.
176. Computer equipment (office equipment) purchased 6 1/2 years ago for $170,000, with an estimated life of
8 years and a residual value of $10,000, is now sold for $60,000 cash. (Appropriate entries for depreciation had
been made for the first six years of use.) Journalize the following entries:
(a) Record the depreciation for the one-half year prior to the sale, using the straight-line method.
(b) Record the sale of the equipment.
(c) Assuming that the equipment had been sold for $25,000 cash, prepare the entry for (b) above to record the sale.
177. Machinery acquired at a cost of $80,000 and on which there is accumulated depreciation of $55,000
(including depreciation for the current year to date) is exchanged for similar machinery. For financial reporting
purposes, present entries to record the disposition of the old machinery and the acquisition of new machinery
under each of the following assumptions:
(a) Price of new, $120,000; trade-in allowance on old, $4,000; balance paid in cash.
(b) Price of new, $120,000; trade-in allowance on old, $34,000; balance paid in cash.
178. Equipment acquired at a cost of $126,000 has a book value of $42,000. Journalize the disposal of the
equipment under the following independent assumptions.
a. The equipment had no market value and was discarded.

b. The equipment is sold for $54,000.
c. The equipment is sold for $24,000.
d. The equipment is traded-in for a similar asset. The list price of the new equipment is $63,000. The buyer gave no cash in the
exchange. The transaction lacks commercial substance.
Journal
Post Ref
Date Description Debit Credit
179. Prepare the following journal entries and calculations:
(a) A patent that was acquired for $410,000 at the beginning of the current year expires in 15 years and is expected to have value for 4
years. Present the adjusting entry to amortize the patent for the current year.
(b) Mineral rights on an ore deposit estimated at 4,000,000 tons of ore were acquired for $2,800,000. Present the adjusting entry to record
depletion for the current year, during which 350,000 tons of ore were removed.
(c) Legal costs incurred to defend the rights that a patent provided in (a) were $60,000. At the time the patent had been in existence for 5
years. Determine the amount to be amortized for the current fiscal year.
180. Macon Co. acquired drilling rights for $7,500,000. The oil deposit is estimated at 37,500,000 gallons.
During the current year, 3,000,000 gallons were drilled. Journalize the adjusting entry at December 31, 2011 to
recognize the depletion expense.
Journal
Post Ref
181. On July 1, 2010, Howard Co. acquired patents rights for $40,000. The patent has a useful life of 8 years
and a legal life of 15 years. Journalize the adjusting entry on December 31, 2010 to recognize the amortization.
Journal
Post Ref
182. On December 31 it was estimated that goodwill of $65,000 was impaired. In addition, a patent with an
estimated useful economic life of 10 years was acquired for $60,000 on July 1.
a) Journalize the adjusting entry on December 31 for the impaired goodwill.

b) Journalize the adjusting entry on December 31 for the amortization of the patent rights.
183. Clanton Company engaged in the following transactions during 2011. Record each in the general journal
below:
1) On January 3, 2011, Clanton purchased a copyright from Dalton Company with a cost of $250,000 with a
remaining useful life of 25 years.
2) On January 10, 2011, Clanton purchased a trademark from Felton Company with a cost of $700,000.
3) On July 1, 2011, Clanton purchased a patent from Garrison Company at a cost of $80,000. The remaining
legal life of the patent is 15 years and the expected useful life is 11 years.
4) On July 2, 2011, Clanton paid $30,000 in legal fees to defend the patent protection purchased on July 1,
2011.
5) Recorded the appropriate amortization for the intangible assets for 2011.
6) Clanton Company includes an asset in its ledger recorded when Clanton purchased a computer service
business at a price in excess of the fair value of the assets of the company in the amount of $400,000. At
December 31, 2011, $100,000 of this asset has become impaired.

Using straight line depreciation, prepare the journal entry to record depreciation expense for (a) the first year,
(b) the second year and (c) the last year.
Chapter 10--Fixed Assets and Intangible Assets Key
1. Long-lived assets that are intangible in nature, used in the operations of the business, and not held for sale in
the ordinary course of business are called fixed assets.
FALSE
2. The acquisition costs of property, plant, and equipment should include all normal, reasonable and necessary
costs to get the asset in place and ready for use.
TRUE
3. When land is purchased to construct a new building, the cost of removing any structures on the land should
be charged to the building account.
FALSE
4. Land acquired as a speculation is reported under Investments on the balance sheet.

TRUE
5. To a major resort, timeshare properties would be classified as property, plant and equipment.
TRUE
6. 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.
TRUE
7. The cost of repairing damage to a machine during installation is debited to a fixed asset account.
FALSE
8. During construction of a building, the cost of interest on a construction loan should be charged to an expense
account.
FALSE
9. The cost of computer equipment does not include the consultant's fee to supervise installation of the
equipment.
FALSE
10. 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.
FALSE
11. Capital expenditures are costs of acquiring, constructing, adding, or replacing property, plant and
equipment.
TRUE
12. The cost of new equipment is called a revenue expenditure because it will help generate revenues in the
future.
FALSE
13. Expenditures that increase operating efficiency or capacity for the remaining useful life of a fixed asset are
betterments.
TRUE
14. The cost of replacing an engine in a truck is an example of ordinary maintenance.

FALSE
15. A capital lease is accounted for as if the asset has been purchased.
TRUE
16. An operating lease is accounted for as if the lessee has purchased the asset.
FALSE
17. An intangible asset is one that has a physical existence.

FALSE
18. A capitalized asset will appear on the balance sheet as a long term asset.
TRUE
19. Long lived assets held for sale are classified as fixed assets.
FALSE
20. Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which
it was intended.
TRUE
21. The normal balance of the accumulated depreciation account is debit.

FALSE
22. As a company records depreciation expense for a period of time a corresponding cash inflow from investing
activities is reported on the statement of cash flows.
FALSE
23. All property, plant, and equipment assets are depreciated over time.
FALSE
24. The book value of a fixed asset reported on the balance sheet represents its market value on that date.
FALSE
25. The depreciable cost of a building is the same as its acquisition cost.
FALSE
26. It is necessary for a company to use the same depreciation method for all of its depreciable assets.
FALSE
27. It is not necessary for a company to use the same depreciation method for financial statements and for
determining income taxes.
TRUE
28. An estimate of the amount which an asset can be sold at the end of its useful life is called residual value.
TRUE
29. The units of production depreciation method provides a good match of expenses against revenue.
TRUE
30. Once the useful life of a depreciable asset has been estimated and the amount to be depreciated each year
has been determined, the amounts can not be changed.
FALSE
31. Residual value is not incorporated in the initial calculations for double-declining-balance depreciation.
TRUE
32. The double-declining-balance method is an accelerated depreciation method.

TRUE
33. The double declining balance depreciation method calculates depreciation each year by taking twice the
straight line rate times the book value of the asset at the beginning of each year.
TRUE
34. When minor errors occur in the estimates used in the determination of depreciation, the amounts recorded
for depreciation expense in the past should be corrected.
FALSE
35. The amount of depreciation expense for the first full year of use of a fixed asset costing $95,000, with an
estimated residual value of $5,000 and a useful life of 5 years, is $19,000 by the straight-line method.
FALSE
36. The amount of depreciation expense for a fixed asset costing $95,000, with an estimated residual value of
$5,000 and a useful life of 5 years or 20,000 operating hours, is $21,375 by the units-of-production method
during a period when the asset was used for 4,500 hours.
FALSE
37. The amount of the depreciation expense for the second full year of use of a fixed asset costing $100,000,
with an estimated residual value of $5,000 and a useful life of 4 years, is $25,000 by the declining-balance
method at twice the straight-line rate.
TRUE
38. When depreciation estimates are revised, all years of the asset’s life are affected.
FALSE
39. For income tax purposes most companies use an accelerated deprecation method called double declining
balance.
FALSE
40. Assets may be grouped according to common traits and depreciated by using a single composite rate.
TRUE
41. Regardless of the depreciation method, the amount that will be depreciated during the life of the asset will
be the same.
TRUE
42. Revising depreciation estimates does affect the amounts of depreciation expense recorded in past periods.
FALSE
43. Capital expenditures are costs that are charged to Stockholders' Equity accounts.
FALSE
44. Though a piece of equipment is still being used, the equipment should be removed from the accounts if it
has been fully depreciated.
FALSE
45. When selling a piece of equipment for cash, a loss will result when the proceeds of the sale are less than the
book value of the asset.
TRUE
46. When a property, plant, and equipment asset is sold for cash, any gain or loss on the asset sold should be
recorded.
TRUE
47. Ordinary gains from the sale of fixed assets should be reported in the other income section of the income
statement.
TRUE
48. A gain can be realized when a fixed asset is discarded.

FALSE
49. When old equipment is traded in for a new equipment, the difference between the list price and the trade in
allowance is called boot.
TRUE
50. When a plant asset is traded for another similar asset, losses on the asset traded are not recognized.
FALSE
51. When exchanging equipment, if the trade-in allowance is greater than the book value a loss results.
FALSE
52. If a fixed asset with a book value of $10,000 is traded for a similar fixed asset, and a trade-in allowance of
$15,000 is granted by the seller, if the transaction is deemed to have commercial substance, the buyer would
report a gain on disposal of fixed assets of $5,000.
TRUE
53. The entry to record the disposal of fixed assets will include a credit to accumulated depreciation.
FALSE
54. Both the initial cost of the asset and the accumulated depreciation will be taken off the books with the
disposal of the asset.
TRUE
55. Minerals removed from the earth are classified as intangible assets.
FALSE
56. The method used to calculate the depletion of a natural resource is the straight line method.
FALSE
57. Intangible assets differ from property, plant and equipment assets in that they lack physical substance.
TRUE
58. The transfer to expense of the cost of intangible assets attributed to the passage of time or decline in
usefulness is called amortization.
TRUE
59. The cost of a patent with a remaining legal life of 10 years and an estimated useful life of 7 years is
amortized over 10 years.
FALSE
60. Costs associated with normal research and development activities should be treated as intangible assets.
FALSE
61. Patents are exclusive rights to manufacture, use, or sell a particular product or process.
TRUE
62. When a major corporation develops its own trademark and over time it becomes very valuable, the
trademark may not be shown on their balance sheet due to lack of a material cost.
TRUE
63. When a company establishes an outstanding reputation and has a competitive advantage because of it, the
company should record goodwill on its financial statements.
FALSE
64. The difference between the balance in a fixed asset account and its related accumulated depreciation
account is the asset's book value.
TRUE
65. When a seller allows a buyer an amount for old equipment that is traded in for new equipment of similar
use, this amount is known as boot.
FALSE
66. An exchange is said to have commercial substance if future cash flows remain the same as a result of the
exchange.
FALSE
67. A characteristic of a fixed asset is that it is

A. intangible
B. used in the operations of a business
C. held for sale in the ordinary course of the business
D. a short-term investment
68. Land acquired so it can be resold in the future is listed in the balance sheet as a(n)
A. fixed asset
B. current asset
C. investment
D. intangible asset
69. Which of the following should be included in the acquisition cost of a piece of equipment?
A. transportation costs
B. installation costs
C. testing costs prior to placing the equipment into production
D. all are correct
70. Which of the following is included in the cost of constructing a building?
A. insurance costs during construction
B. cost of paving parking lot
C. cost of repairing vandalism damage during construction
D. cost of removing the demolished building existing on the land when it was purchased
71. Which of the following is included in the cost of land?

A. cost of paving a parking lot
B. brokerage commission
C. outdoor parking lot lighting attached to the land
D. fences on the land
72. Accumulated Depreciation

A. is used to show the amount of cost expiration of intangibles
B. is the same as Depreciation Expense
C. is a contra asset account
D. is used to show the amount of cost expiration of natural resources
73. A building with an appraisal value of $154,000 is made available at an offer price of $172,000. The
purchaser acquires the property for $40,000 in cash, a 90-day note payable for $45,000, and a mortgage
amounting to $75,000. The cost basis recorded in the buyer's accounting records to recognize this purchase is
A. $154,000
B. $172,000
C. $160,000
D. $120,000
74. A used machine with a purchase price of $77,000, requiring an overhaul costing $8,000, installation costs of
A. $93,000
B. $90,000
C. $82,000
D. $85,000
75. A new machine with a purchase price of $109,000, with transportation costs of $12,000, installation costs of
A. $114,000
B. $126,000
C. $121,000
D. $132,000
76. Expenditures that add to the utility of fixed assets for more than one accounting period are
A. committed expenditures
B. revenue expenditures
C. utility expenditures
D. capital expenditures
77. A capital expenditure results in a debit to

B. a capital account
C. a liability account
D. an asset account
78. Which of the following below is an example of a capital expenditure?

A. cleaning the carpet in the front room
B. tune-up for a company truck
C. replacing an engine in a company car
D. replacing all burned-out light bulbs in the factory
79. In a lease contract, the party who legally owns the asset is the
A. lessee
B. lessor
C. operator
D. banker
80. All leases are classified as either

A. capital leases or long-term leases
B. capital leases or operating leases
C. operating leases or current leases
D. long-term leases or current leases
81. The journal entry for recording an operating lease payment would
A. be a memo entry only
B. debit the fixed asset and credit Cash
C. debit an expense and credit Cash
D. debit a liability and credit Cash
82. When determining whether to record an asset as a fixed asset, what two criteria must be met?
A. Must be an investment and must be long lived.
B. Must be long lived and must use the asset in a productive manner.
C. Must be short lived and must be a tangible asset.
D. Must be a tangible asset and must be an investment.
83. Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two
categories
A. salvage and functional
B. physical and functional
C. residual and salvage
D. functional and residual
84. A fixed asset's estimated value at the time it is to be retired from service is called
A. book value
B. residual value
C. market value
D. carrying value
85. All of the following below are needed for the calculation of straight-line depreciation except
A. cost
B. residual value
C. estimated life
D. units produced
86. The method of determining depreciation that yields successive reductions in the periodic depreciation
charge over the estimated life of the asset is
A. units-of-production
B. declining-balance
C. straight-line
D. time-valuation
87. When the amount of use of a fixed asset varies from year to year, the method of determining depreciation
expense that best matches allocation of cost with revenue is
A. declining-balance
B. straight-line
D. MACRS
88. A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5
years or 15,000 hours. It is to be depreciated by the units-of-production method. What is the amount of
depreciation for the second full year, during which the machine was used 5,000 hours?
A. $ 5,000
B. $35,000
C. $21,000
D. $45,000
89. Equipment with a cost of $220,000 has an estimated residual value of $30,000 and an estimated life of 10
years or 19,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for
the first full year, during which the equipment was used 2,100 hours?
A. $19,000
B. $21,000
C. $22,000
D. $30,000
90. A machine with a cost of $75,000 has an estimated residual value of $5,000 and an estimated life of 4 years
or 18,000 hours. What is the amount of depreciation for the second full year, using the double declining-balance
method?
A. $17,500
B. $37,500
C. $18,750
D. $16,667
91. The most widely used depreciation method is

A. straight-line
B. double-declining-balance
D. units-of-production or double-declining-balance
92. Equipment with a cost of $160,000, an estimated residual value of $40,000, and an estimated life of 15 years
was depreciated by the straight-line method for 4 years. Due to obsolescence, it was determined that the useful
life should be shortened by 3 years and the residual value changed to zero. The depreciation expense for the
current and future years is
A. $11,636
B. $16,000
C. $11,000
D. $8,000
93. The depreciation method that does not use residual value in calculating the first year's depreciation expense
is
A. straight-line
B. units-of-production
C. double-declining-balance
D. none of the above
94.
If a fixed asset, such as a computer, were purchased on January 1st for $3,750 with an estimated life of 3 years
and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation
is:
(Note: EOM indicates the last day of each month.)
A. EOM Depreciation Expense 100
Accumulated Depreciation 100
B. EOM Depreciation Expense 1,200
C. EOM Accumulated Depreciation 1,200
D. EOM Accumulated Depreciation 100
Depreciation Expense 100
95. The proper journal entry to purchase a computer costing $975 on account on January 2 to be utilized within
the business would be:
A. Jan 2 Office Supplies 975
B. Jan 2 Office Equipment 975
C. Jan 2 Office Supplies 975
D. Jan 2 Office Equipment 975
96. Residual value is also known as all of the following except

A. scrap value
B. trade in value
C. salvage value
D. net book value
97. The formula for depreciable cost is
A. initial cost + residual value
B. initial cost - residual value
C. initial cost - accumulated depreciation
D. depreciable cost = initial cost
98. Expected useful life is

A. calculated when the asset is sold.
B. estimated at the time that the asset is placed in service.
C. determined each year that the depreciation calculation is made.
D. none of the answers are correct.
99. The calculation for annual depreciation using the straight-line depreciation method is
A. initial cost / estimated useful life
B. depreciable cost / estimated useful life
C. depreciable cost * estimated useful life
D. initial cost * estimated useful life
100. The calculation for annual depreciation using the units-of-production method is
A. (initial cost/estimated output) * the actual yearly output
B. (depreciable cost / yearly output) * estimated output
C. depreciable cost / yearly output
D. (depreciable cost / estimated output) * the actual yearly output
residual value of $9,000 and an estimated useful life of 5 years. Determine the 2nd year’s depreciation using
straight-line depreciation.
A. $13,200
B. $19,200
C. $ 9,600
D. $ 9,000
102. Which of the following is true?
A. If using the double-declining-balance the total amount of depreciation expense during the life of the asset
will be the highest.
B. If using the units-of-production method, it is possible to depreciate more than the depreciable cost.
C. If using the straight line method, the amount of depreciation expense during the first year is higher than that
of the double-declining-balance.
D. Regardless of the depreciation method, the amount of total depreciation expense during the life of the asset
will be the same.
103. 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.
A. $25,000
B. $11,000
C. $24,000
D. $24,500
priced at $60,000 in a transaction with commercial substance. Assuming a trade-in allowance of $5,000, the
cost basis of the new asset is
A. $54,000
B. $59,500
C. $60,000
D. $60,500
priced at $50,000. Assuming a trade-in allowance of $4,000, the cost basis of the new asset is
A. $54,000
B. $45,000
C. $51,000
D. $50,000
priced at $60,000. Assuming a trade-in allowance of $3,000, the recognized loss on the trade is
A. $3,000
B. $4,500
C. $ 500
D. $1,500
107. A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 is sold for $3,500. What is
the amount of the gain or loss on disposal of the fixed asset?
A. $2,000 loss
B. $1,500 loss
C. $3,500 gain
D. $2,000 gain
108. The Bacon Company acquired new machinery with a price of $15,200 by trading in similar old machinery
and paying $12,700. The old machinery originally cost $9,000 and had accumulated depreciation of
$5,000. In recording this transaction, Bacon Company should record
A. the new machinery at $16,700
B. the new machinery at $12,700
C. a gain of $1,500
D. a loss of $1,500
109. When a company discards machinery that is fully depreciated, this transaction would be recorded with the
following entry
A. debit Accumulated Depreciation; credit Machinery
B. debit Machinery; credit Accumulated Depreciation
C. debit Cash; credit Accumulated Depreciation
D. debit Depreciation Expense; credit Accumulated Depreciation
110. When a company sells machinery at a price equal to its book value, this transaction would be recorded
with an entry that would include the following:
A. debit Cash and Accumulated Depreciation; credit Machinery
B. debit Machinery; credit Cash and Accumulated Depreciation
D. debit Cash and Depreciation Expense; credit Accumulated Depreciation
111. When a company exchanges machinery and receives a trade-in allowance greater than the book value, this
transaction would be recorded with the following entry (assuming the exchange was considered to have
commercial substance):
A. debit Machinery and Accumulated Depreciation; credit Machinery, Cash, and Gain on Disposal
B. debit Machinery and Accumulated Depreciation; credit Machinery and Cash
D. debit Cash and Machinery; credit Accumulated Depreciation and Machinery
112. When a company exchanges machinery and receives a trade-in allowance less than the book value, this
transaction would be recorded with the following entry:
A. debit Machinery and Accumulated Depreciation; credit Machinery and Cash
B. debit Cash and Machinery; credit Accumulated Depreciation
C. debit Cash and Machinery; credit Accumulated Depreciation and Machinery
D. debit Machinery, Accumulated Depreciation, and Loss on Disposal; credit Machinery and Cash
113. On December 31, Strike Company has decided to discard one of its batting cages. The initial cost of the
end of the year. The following will be included in the entry to record the disposal.
A. Accumulated Depreciation Dr. $310,000
B. Loss on Disposal of Asset Dr. $260,000
C. Equipment Cr. $310,000
D. Gain on Disposal of Asset Cr. $50,000
A. Gain of $50,000
B. Loss of $50,000
C. No gain or loss
A. Gain of $20,000
B. Loss of $30,000
C. No gain or loss
A. Cannot be determined
B. No gain or loss
C. Gain of $ 5,000
D. Gain of $55,000
117. 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?
A. Loss of $11,000
B. Gain of $11,000
C. Loss of $19,000
D. No loss or gain will be recorded.
118. When a company replaces a component of property, plant and equipment, which statement below does not
account for one of the steps in the process?
A. book value of the replaced component is written off to depreciation expense
B. the asset cost of the replaced component is credited
C. any cost to remove the old component is charged to expense
D. the identifiable direct costs associated with the new component are capitalized
119. The accumulated depletion account is

B. an intangible asset account
C. reported on the income statement as other expense
D. reported on the balance sheet as a deduction from the cost of the mineral deposit
120. The process of transferring the cost of metal ores and other minerals removed from the earth to an expense
account is called
A. depletion
B. deferral
C. amortization
D. depreciation
121. The Weber Company purchased a mining site for $1,750,000 on July 1, 2014. The company expects to
mine ore for the next 10 years and anticipates that a total of 400,000 tons will be recovered. The estimated
residual value of the property is $150,000. During 2014 the company extracted 6,500 tons of ore. The
depletion expense for 2014 is
A. $17,500
B. $16,000
C. $26,000
D. $15,000
122. Expenditures for research and development are generally recorded as
A. current operating expenses
B. assets and amortized over their estimated useful life
C. assets and amortized over 40 years
D. current assets
123. The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of
intangible assets is
A. amortization
B. depletion
C. depreciation
D. allocation
124. Xtra Company purchased goodwill from Argus for $96,000. Argus had developed the goodwill over 12
years. How much would Xtra amortize the goodwill for its first year?
A. $7,000
B. $ 8,000
C. Goodwill is not amortized.
D. Not enough information.
125. Which intangible assets are amortized over their useful life?
A. trademarks
B. goodwill
C. patents
D. all of the above
126. The exclusive right to use a certain name or symbol is called a

A. goodwill
B. patent
C. trademark
D. copyright
127. Fixed assets are ordinarily presented in the balance sheet

A. at current market values
B. at replacement costs
C. at cost less accumulated depreciation
D. in a separate section along with intangible assets
128. Machinery was purchased on January 1, 2010 for $51,000. The machinery has an estimated life of 7 years
and an estimated salvage value of $9,000. Double-declining balance depreciation for 2011 would be
A. $10,929
B. $6,000
C. $10,500
D. $10,408
Using straight line depreciation, calculate depreciation expense for the first year.
A. $17,500
B. $30,000
C. $12,500
D. $40,000
Using straight line depreciation, calculate depreciation expense for the second year.
A. $17,500
B. $30,000
C. $12,500
D. $40,000
Using straight line depreciation, calculate depreciation expense for the last year.
A. $17,500
B. $30,000
C. $12,500
D. $40,000
132. What is the cost of the land, based upon the following data?
Land purchase price $178,000

Broker's commission 15,000
Payment for the demolition
and removal of existing building 5,000
Cash received from the sale of materials
salvaged from the demolished building 2,000
$196,000
133. Comment on the validity of the following statements. "As an asset loses its ability to provide services,
cash needs to be set aside to replace it. Depreciation accomplishes this goal."
Depreciation is the periodic transfer of the cost of an asset to expense. Depreciation is a noncash expense.
Depreciation does not accumulate cash for replacements.
134. On April 15, Compton Co. paid $2,800 to upgrade a delivery truck and $125 for an oil change. Journalize
the entries for the upgrade to delivery truck and oil change expenditures.
April 15 Delivery Truck 2,800

Cash 2,800
15 Repairs and Maintenance Expense 125

Cash 125
residual value of $3,800 and an estimated useful life of 8 years. Determine the (a) depreciable cost, (b)
straight-line rate, and (c) annual straight-line depreciation.
(a) $61,200
(b) 12.5%
(c) $7,650
136. A double-declining balance rate for calculating depreciation expense is determined by doubling the
straight-line rate. Assuming that an asset has a useful life of 25 years, determine the rate to be used if using the
double-declining balance method.
4% * 2 = 8%
137. Copy equipment was acquired at the beginning of the year at a cost of $72,000 that has an estimated
residual value of $9,000 and an estimated useful life of 5 years. It is estimated that the machine has an
estimated 1,000,000 copies. This year 315,000 copies were made. Determine the (a) depreciable cost, (b)
depreciation rate, and (c) the units-of-production depreciation for the year.
(a) $63,000
(b) $0.063 per copy
(c) $19,845 (315,000*$0.063)
138. A machine costing $57,000 with a 6-year life and $54,000 depreciable cost was purchased January 1,
2015. Compute the yearly depreciation expense using straight-line depreciation.
$54,000  6 years = $9,000 per year
139. A machine costing $85,000 with a 5-year life and $5,000 residual value was purchased January 2,
2011. Compute depreciation for each of the five years, using the declining-balance method at twice the
straight-line rate.
(1) Year 1 $85,000 ´ .40 = $34,000

(2) Year 2 $51,000 ´ .40 = $20,400
(3) Year 3 $30,600 ´ .40 = $12,240
(4) Year 4 $18,360 ´ .40 = $7,344
(5) Year 5 $11,016 - $5,000 = $6,016
residual value of $3,000 and an estimated useful life of 5 years. Determine the (a) depreciable cost (b)
double-declining-balance rate, and (c) double-declining-balance depreciation for the first year.
(a) $60,000
(b) 40%
(c) $25,200 ($63,000 * 40%)
141. An asset was purchased for $58,000 and originally estimated to have a useful life of 10 years with a
residual value of $3,000. After two years of straight line depreciation, it was determined that the remaining
useful life of the asset was only 2 years with a residual value of $2,000.
a) Determine the amount of the annual depreciation for the first two years.
b) Determine the book value at the end of the 2nd year.
c) Determine the depreciation expense for each of the remaining years after revision.
a) $5,500
b) $47,000
c) $22,500
142. Equipment was acquired at the beginning of the year at a cost of $75,000. The equipment was depreciated
using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of
$7,500.
a) What was the depreciation expense for the first year?

b) Assuming the equipment was sold at the end of the second year for $59,000, determine the gain or loss on sale of the equipment.
c) Journalize the entry to record the sale.
a) $11,250
b) $6,500 Gain
c)
Cash 59,000
Accumulated 22,500
Depreciation
Equipment 75,000
Gain on Sale of Asset 6,500
143. On the first day of the fiscal year, a new walk-in cooler with a list price of $58,000 was acquired in
exchange for an old cooler and $44,000 cash. The old cooler had a cost of $25,000 and accumulated
depreciation of $16,000.
Assume the transaction has commercial substance.
a) Determine the gain to be recorded on the exchange.

b) Journalize the entry to record the exchange.
a)
List price $58,000

Book value of old cooler 9,000
Cash paid 44,000 53,000
Gain on exchange $5,000
b)
Equipment (new) 58,000
Accum. Depreciation16,000
Equipment 25,000
Gain on Exchange of Assets 5,000
Cash 44,000
144. Solare Company acquired mineral rights for $60,000,000. The diamond deposit is estimated at 6,000,000
a. Determine the depletion rate.

b. Determine the amount of depletion expense for the current year.
c. Journalize the adjusting entry to recognize the depletion expense.
a) $10 per ton

b) $23,000,000
c) Dec 31 Depletion 23,000,000
Expense
Accumula 23,000,000
ted
Depletion
Depletion
of mineral
deposit
145. Falcon Company acquired an adjacent lot to construct a new warehouse, paying $40,000 and giving a
short-term note for $410,000. Legal fees paid were $13,275, delinquent taxes assessed were $14,500, and fees
paid to remove an old building from the land were $15,800. Materials salvaged from the demolition of the
building were sold for $6,800. A contractor was paid $890,000 to construct a new warehouse. Determine the
cost of the land to be reported on the balance sheet and show your work.
Initial $450,000
cost of
land
($40,0
00 +
$410,0
00)
Plus: Legal fees 13,275
Delinquent taxes 14,500
Demolition of building 15,800 43,575
$493,575
Less: Salvage of materials 6,800
Cost of land $486,775
146. 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
(1) 50% (1/2)

(2) 12.5% (1/8)
(3) 10% (1/10)
(4) 5% (1/20)
(5) 4% (1/25)
(6) 2.5% (1/40)
(7) 2% (1/50)
147. Prior to adjustment at the end of the year, the balance in Trucks is $300,900 and the balance in
Accumulated Depreciation-Trucks is $88,200. Details of the subsidiary ledger are as follows:
Truck No. Cost Estimated Residual Value Estimated Useful Life Accumulated Depreciation at Miles Operated During
Beginning of Year Year
1 $100,000 $13,000 300,000 -- 30,000
2 72,900 9,900 300,000 $60,000 25,000
3 38,000 3,000 200,000 8,050 45,000
4 90,000 13,000 200,000 20,150 40,000
Required:
(1) Determine the depreciation rates per mile and the amount to be credited to the accumulated depreciation section of each of the
subsidiary accounts for the miles operated during the current year.
(2) Journalize the entry to record depreciation for the year.
(1)
Truck No. RatMiles Operated Depreciation

e
per
Mi
le
1 30,000 $8,700
29.
0
cen
ts
2 25,000 3,000*
21.
0
3 45,000 7,875
17.
5
4 40,000 15,400
38.
5
Tot34,975
al
*M
ile
age
de
pre
cia
tio
n
of
$5,
25
0
(21
cen
ts ´
25,
00
0)
is
lim
ite
d
to
$3,
00
0,
wh
ich
red
uce
s
the
bo
ok
val
ue
of
the
tru
ck
to
$9,
90
0,
its
res
idu
al
val
ue.
(2) Depre 34,975

ciatio
n
Expe
nse—
Truck
s
Accumulated Depreciation—Trucks 34,975
148. Champion Company purchased and installed carpet in its new general offices on March 30 for a total cost
of $18,000. The carpet is estimated to have a 15-year useful life and no residual value.
a. Prepare the journal entries necessary for recording the purchase of the new carpet.
b. Record the December 31 adjusting entry for the partial-year depreciation expense for the carpet assuming that Champion Company
uses the straight-line method.
a. Mar. 30 Car 1
pet 8
,
0
0
0
C18,000
a
s
h
b. Dec. 31 Dep 9
reci 0
atio 0
n
Exp
ense
Acc 900
umu
late
d
Dep
reci
atio
n
C
a
r
p
e
t
d
e
p
r
e
c
i
a
t
i
o
n
[($1
8,00
0/15
year
s) ´
9/12
].
149. 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 annual 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 January 2, 2014, for $170,500, journalize the entry to record the sale.
(4) Assuming that the equipment had been sold on January 2, 2014, for $189,000 instead of $168,500, journalize the entry to record
the sale.
(1) 2011 depreciation expense: $29,750 [($273,500 – $35,500)/8]

2012 depreciation expense: $29,750
2013 depreciation expense: $29,750
(2) $184,250 [$273,500 – ($29,750 ´ 3)]
(3) Cash 170,500

Accu 89,25
mulat 0
ed
Depre
ciatio
n—E
quip
ment
Loss 13,75
on 0
Dispo
sal of
Fixed
Asset
s
Equipment 273,500
(4) Cash 189,000

Accu 89,25
mulat 0
ed
Depre
ciatio
n—E
quip
ment
Equipment 273,500
Gain on Disposal of Fixed Assets 4,750
150. Chasteen Company acquired mineral rights for $9,100,000. The mineral deposit is estimated at 65,000,000
Required:
(1) Determine the amount of depletion expense for the current year.
(2) Journalize the adjusting entry to recognize the depletion expense.

(1) $
9,
1
0
0,
0
0
0/
6
5,
0
0
0,
0
0
0
to
n
s
=
$
0.
1
4
d
e
pl
et
io
n
p
er
to
n
1
8,
3
7
5,
0
0
0
´
$
0.
1
4
=
$
2,
5
7
2,
5
0
0
d
e
pl
et
io
n
e
x
p
e
n
s
e
(2) D 2,572
e ,500
pl
et
io
n
E
x
p
e
n
s
e
Accu 2,572,500
mulat
ed
Deple
tion
Deple
tion
of
miner
al
depos
it.
151. Icon Company acquired patent rights on January 1, 2009 for $1,125,000. The patent has a useful life equal
to its legal life of 15 years. On January 2, 2012, Icon successfully defended the patent in a lawsuit at a cost of
$90,000.
Required:
(1) Determine the patent amortization expense for the current year ended December 31, 2012.
(2) Journalize the adjusting entry to recognize the amortization.
(1) (
$
1,
1
2
5,
0
0
0/
1
5
)
+
(
$
9
0,
0
0
0/
1
2
)
=
$
8
2,
5
0
0
to
ta
l
p
at
e
nt
e
x
p
e
n
s
e
(2) A 82,50
m0
o
rt
iz
at
io
n
E
x
p
e
n
s
e
—
P
at
e
nt
s
Paten 82,500
ts
Amor
tized
patent
rights
($75,
000 +
$7,50
0).
152. The following information was taken from a recent annual report of Harrison Company: (in millions)
2012 2011
Land and buildings $726 $361
Machinery, equipment, and internal-use software 595 470
Office furniture and equipment 94 81
Other fixed assets related to leases 760 569
Accumulated depreciation and amortization 894 644
Required:
(1) Compute the book value of the fixed assets for the 2012 and 2011 and explain the differences, if any.
(2) Would you normally expect the book value of fixed assets to increase or decrease during the year?
(1) Prope
rty,
Plant,
and
Equip
ment
(in
millio
ns):
Current Preceding
Year Year
Land $726 $361

and
buildi
ngs
Mach 595 470
inery,
equip
ment,
and
intern
al-use
softw
are
Offic 94 81
e
furnit
ure
and
equip
ment
Other 760 569
fixed
assets
relate
d to
leases
$2,175 $1,481
Less 894 644
accu
mulat
ed
depre
ciatio
n
Book $1,281 $837
value
A
comp
arison
of the
book
value
s of
the
curre
nt and
prece
ding
years
indica
tes
that
they
increa
sed.
A
comp
arison
of the
total
cost
and
accu
mulat
ed
depre
ciatio
n
reveal
s that
Harri
son
purch
ased
$694
millio
n
($2,1
75 –
$1,48
1) of
additi
onal
fixed
assets
,
which
was
offset
by the
additi
onal
depre
ciatio
n
expen
se of
$250
millio
n
($894
–
$644)
taken
durin
g the
curre
nt
year.
(2) The
book
value
of
fixed
assets
shoul
d
norm
ally
increa
se
durin
g the
year.
Altho
ugh
additi
onal
depre
ciatio
n
expen
se
will
reduc
e the
book
value,
most
comp
anies
invest
in
new
assets
in an
amou
nt
that is
at
least
equal
to the
depre
ciatio
n
expen
se.
Howe
ver,
durin
g
perio
ds of
econo
mic
down
turn,
comp
anies
purch
ase
fewer
fixed
assets
, and
the
book
value
of
their
fixed
153. 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.
a. Depre 15,00
ciatio 0
n
Expe
nse—
Equip
ment
Accu 15,000
mulat
ed
Depre
ciatio
n—E
quip
ment
Equip
ment
depre
ciatio
n
($20,
000 ´
9/12).
b. Accu 235,0
mulat 00
ed
Depre
ciatio
n—E
quip
ment
Equip 458,0
ment 00
Loss 9,000
on
Exch
ange
of
Fixed
Asset
s
Equip 336,0
ment 00
Cash 366,0
00
154. 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.
(1) Dec 31 Loss 80,000

from
Impai
red
Good
will
Goodwill 8
0,
0
0
0
(2) Dec 31 Amor 14,700

tizati
on
Expe
nse -
Paten
ts
Patents 1
4,
7
0
0
Amortized patent rights = [($252,000/10) ´ (7/12)] = $14,700
155. 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.
Item Cost Residual Value Purchase Date Disposal date Depr Method Depr Expense 2011
A $40,000 $4,000 7/1/2011 N/A SL
B $50,000 $5,000 1/1/2009 8/31/2011 SL
C $60,000 $2,000 10/1/2011 N/A DDB
D $80,000 $10,000 1/1/2010 4/1/2011 DDB
Item Cost Residual Value Purchase Date Disposal Date Depr Method Depr Expense 2011
A $40,000 $4,000 7/1/2011 N/A SL $3,600
B $50,000 $5,000 1/1/2009 8/31/2011 SL $6,000
C $60,000 $2,000 10/1/2011 N/A DDB $6,000
D $80,000 $10,000 1/1/2010 4/1/2011 DDB $4,800
156. 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:
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.?
2012 2011
Fixed Assets:
End of the year 829,330 901,070
Average Fixed Assets $865,200 $860,535
Net Sales Divided by Average Fixed Assets:

2012 ($2,595,600/ $865,200) 3.0
2011 ($2,409,498/$860,535) 2.8
The increase in Fixed Assets turnover indicates an increase in efficiency of using fixed assets to generate sales.
157. Fill in the missing numbers using the formula for Fixed Asset Turnover:

Net Sales $5,000,000 $720,000 $900,000 ?
Beginning Fixed Assets $450,000 $275,000 ? $380,000
Ending Fixed Assets $800,000 ? $310,000 $420,000
Fixed Asset Turnover ? 2.4 times 3 times 2.6 times

Net Sales $5,000,000 $720,000 $900,000 $1,040,000
Beginning Fixed Assets $450,000 $275,000 $290,000 $380,000
Ending Fixed Assets $800,000 $325,000 $310,000 $420,000
Fixed Asset Turnover 8 times 2.4 times 3 times 2.6 times
158. 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.

Accumulated Depreciation - Machinery 11,232
Cash 75,000
Accumulated Depreciation - Machinery 66,352
Machinery 130,000
Gain on Sale of Machinery 11,352
159. 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.
After using the equipment for 3 years, the useful life was revised to a total of 10 years and the residual value
was reduced to $2,004.
Determine the straight-line depreciation expense for the year 2014 and following years.
Book value at beginning of 2014:

Cost $90,000
Residual 8,000
Depreciable cost $82,000
Depreciation Expense for first 3 years: 82,000 / 8 = $10,250

$10,250 X 3 = $30,750
Book Value Jan. 1, 2014 $59,250
Revised Depreciation Expense Calculation:

Book Value at beginning of 2014 $59,250
Less revised residual value - 2,004
Remaining depreciable amount 57,246
Divided by remaining life 7
Depreciation Expense for 2014 $8,178
160. Identify each of the following expenditures as chargeable to (a) Land, (b) Land Improvements, (c)
Buildings, (d) Machinery and Equipment, or (e) other account.
(1) Cost of paving parking area for employees and customers.

(2) Insurance during construction of building.
(3) Interest incurred on loan during construction of building.
(4) Fee paid for installation of equipment.
(5) Special foundation for new equipment acquired.
(6) Insurance on new equipment while in transit.
(7) Freight charges on new equipment.
(8) Cost of repairing vandalism damage to equipment during installation.
(9) Sales tax on new equipment.
(10) Cost incurred in repairing damage resulting from installation of new equipment.
(11) Cost of land fill for building site.
(12) Cost of lubricating oil purchased for periodic oil changes for equipment.
(13) Parking lot lighting.
(14) Installing a fence around the parking lot.
(15) Repainting the trim on a building.
(16) Special assessment paid to city for extension of water main to property.
(17) Cost of razing and removing the old building on property acquired for a building site.
(18) Delinquent real estate taxes assumed by purchaser on property acquired for a building site.
(19) Attorney's fee for title search.
(20) Architect's fee for building plans and supervision of construction.
(a) 11, 16, 17, 18, 19

(b) 1, 13, 14
(c) 2, 3, 20
(d) 4, 5, 6, 7, 9
(e) 8, 10, 12, 15
161. 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. Treasury note
(f) land used for employee parking
(g) gold mine
FA (a) (f)
IA (b) (d)
NR (c) (g)
N (e)
162. 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) What has the amount of annual depreciation been in past years?
(b) What was the original life estimate of the building?
(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 amount of straight-line depreciation for the current year, assuming that the repairs were completed at the very beginning of
the current year? Round to the nearest dollar.
(a) $182,000 ($4,550,000  25)

(b) 36 years ($6,552,000  $182,000)
(c) Accumulated Depreciation - Building
(d) $3,002,000 ($6,552,000 + $1,000,000 - $4,550,000)
(e) 21 years (36 - 25 + 10)
(f) $142,952 ($3,002,000  21)
163. Journalize each of the following transactions:
(a) A wing costing $2,345,000 was added to the building. A new mortgage was issued for the cost.
(b) Equipment was upgraded to increase its capacity to produce widgets. The upgrade cost of $11,500 was paid in cash.
(c) A major overhaul costing $8,000 on a machine increased the useful life by 4 years. The payment was made in cash.
(a) Building 2,345,000

Mortgage Payable 2,345,000
(b) Equipment 11,500

Cash 11,500
(c) Accumulated Depreciation-Machinery 8,000

Cash 8,000
164. 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 roof that had been on the building 23 years.
c. Serviced all the air conditioners before summer started.
d. Replaced the air conditioners with 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.
a. Revenue expenditure
b. Capital expenditure, replacement
c. Revenue expenditure
d. Capital expenditure, replacement
e. Capital expenditure, additional
f. Revenue expenditure
g. Capital expenditure, additional
165. 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) units-of-production (1,200 hours first year; 2,250 hours second year)
(c) declining-balance at twice the straight-line rate
1st Year
(a) $70,000 ($360,000 - $10,000) = $350,000  5
(b) $30,000 ($360,000 - $10,000) = ($350,000  14,000 hours) = $25/hr ´ 1,200
(c) $144,000 ($360,000 ´ .40)
2nd Year
(a) $70,000 ($360,000 - $10,000) = $350,000  5
(b) $56,250 ($360,000 - $10,000) = ($350,000  14,000 hours) = $25/hr ´ 2,250
(c) $86,400 ($360,000 - $144,000) = $216,000 ´ .40
166. 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)
(a) $28,125 = ($240,000 - $15,000) = $225,000  4 = $56,250 ´ 6/12

(b) $60,000 = ($240,000 ´ .50) = $120,000 ´ 6/12
(c) $14,400 = ($240,000 - $15,000) = ($225,000  25,000 hours) = $9.00 ´ 1,600 hours
167. 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.
(a) Year of acquisition: $50,000 = ($500,000 ´ .40) = ($200,000 ´ 3/12)

Following year: $180,000 = ($500,000 - $50,000) = $450,000 ´ .40
(b) Year of acquisition: $22,500 = ($500,000 - $50,000) = ($450,000  5) = $90,000 ´ 3/12
Following year: $90,000 = ($500,000 - $50,000) = $450,000  5
168. 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.
(a) What is the book value at the end of the sixth year of use?
(b) If early in the seventh year it is estimated that the remaining useful life is 5 years (instead of 4) and the residual value is $6,000,
what is the amount of depreciation for the seventh year?
(a) ($80,000 - $8,000) = $72,000

$72,000/10 = $7,200
$7,200 x 6 = $43,200
$80,000 - $43,200 = $36,800
(b) $6,160 ($36,800 - $6,000)  5
169. Golden Sales has bought $135,000 in fixed assets on January 1st associated with sales equipment. The
residual value of these assets is estimated at $10,000 after they service their 4 year service life. Golden Sales
managers want to evaluate the options of depreciation.
(a) Compute the annual straight-line depreciation and provide the sample depreciation journal entry to be posted
at the end of each of the years.
(b) Write the journal entries for each year of the service life for these assets using the double- declining balance
method.
(a)
Acquisition cost $135,000

Less residual value 10,000
Depreciable value $125,000
Divided by service life 4 years
Annual depreciation $31,250
Dec 31 Depreciation Expense Sales Equipment 31,250

Accumulated Depreciation - Sales Equipment 31,250
(b) 1st year: Acquisition cost - $135,000 ´ 50% = $67,500 first year depreciation
2nd year: ($135,000 - $67,500) ´ 50% = $33,750 second year depreciation
3rd year: ($135,000 - $67,500 - $33,750) ´ 50% = $16,875 third year depreciation
4th year: $135,000 - $67,500 - $33,750 - $16,875 - $10,000 residual value = $6,875 fourth year depreciation
1st year, Dec 31 67,500

Depreciation Expense -
Sales Equipment
2nd year, Dec 31 33,750

Sales Equipment
3rd year, Dec 31 16,875

Sales Equipment
4th year, Dec 31 6,875

Sales Equipment
Note: The residual value is $10,000 and this value is taken into account in the computation of the final year of depreciation.
170. On July 1st, Harding Construction purchases a bulldozer for $228,000. The equipment has a 8 year life
with a residual value of $16,000. Harding uses straight-line depreciation.
(a) Calculate the depreciation expense and provide the journal entry for the first year ending December 31st.
(b) Calculate the third year’s depreciation expense and provide the journal entry for the third year ending
December 31st.
(c) Calculate the last year’s depreciation expense and provide the journal entry for the last year.
Annual depreciation is:

Depreciable amount 212,000
Divided by service life in years 8
Annual depreciation $26,500
(a) First year depreciation is $26,500 ´ (6/12) = $13,250 (July through December)
Dec 31st Depreciat 13,250
ion
Expense
Accumul 13,250
ated
Depreciat
ion
(b) Journal entry for the third year. (It is also the same for all years other than the first and last year):
ion
Expense
Accumul 26,500
ated
Depreciat
ion
(c) Last year depreciation is $26,500 ´ (6/12) = $13,250 (January through June)
ion
Expense
Accumul 13,250
ated
Depreciat
ion
171. On July 1st, Hartford Construction purchases a bulldozer for $228,000. The equipment has a 9 year life
with a residual value of $16,000. Hartford uses units-of-production method depreciation and the bulldozer is
expected to yield 26,500 operating hours.
(a) Calculate the depreciation expense per hour of operation.
(b) The bulldozer is operated 1,250 hours in the first year, 2,755 hours in the second year, and 1,225 hours in
the third year of operations. Journalize the depreciation expense for each year.
(a) Hourly depreciation is:

Depreciable amount 212,000
Service life in hours 26,500
Hourly depreciation $8
(b) First year - 1,250 hours ´ $ 8 per hour = $10,000

1st year Depreciation 10,000
Expense
Accumulated 10,000
Depreciation
Second year - 2,755 hours ´ $ 8 per hour = $22,040

2nd year Depreciation 22,040
Expense
Accumulated 22,040
Depreciation
Third year - 1,225 hours ´ $ 8 per hour = $ 9,800

3rd year Depreciation 9,800
Expense
Accumulated 9,800
Depreciation
172. Eagle Country Club has acquired a lot to construct a clubhouse. Eagle had the following costs related to
the construction:

Fences around building 9,000
Grading and leveling 10,000
Land 73,000
Sales Taxes 6,000
Trees and Shrubs 6,000
Determine the cost of the Club House to be reported on the balance sheet.

Sales Taxes 6,000
Cost of Club House $395,000
173. A copy machine acquired with a cost of $1,410 has an estimated useful life of 4 years. It is also expected
to have a useful operating life of 13,350 copies. Assuming that it will have a residual value of $75, determine
the depreciation for the first year by the
a. straight-line method
b. double declining-balance method
c. production method (4,500 copies were made the first year)
a. Straight-line depreciation = (cost-estimated residual value)/ estimated life

Straight-line depreciation = ($1,410 - $75)/4
Straight-line depreciation = $333.75 per year
b. Double-declining Balance Method = $705
Book Value at Depreciation

Year Cost Beginning of Year Rate for Year
1 $1,410 $1,410 50%* $705
*Rate = (100%/Life) ´ 2
Rate = (1/4) ´ 2
Rate = 0.50
c. Units-of-production = (cost-residual value) / estimated copies

Units-of-production = ($1,410 - $75)/13,350
Units-of-production = $0.10 per copy
First year depreciation = $450.00 ($.10 ´ 4,500)

174. A copy machine acquired on March 1, 2011 with a cost of $1,410 has an estimated useful life of 3
years. Assuming that it will have a residual value of $150, determine the depreciation for the first and second
year by the straight-line method.
Straight-line depreciation = (cost-estimated residual value)/ estimated life

Straight-line depreciation = ($1,410 - $150)/3
Straight-line depreciation = $420 per year
First year = $350 ($420 / 12 months * 10)

Second year = $420
175. A copy machine acquired on March 1, 2011 with a cost of $705 has an estimated useful life of 4
years. Assuming that it will have a residual value of $125, determine the depreciation for the first year by the
double-declining-balance method.
First year depreciation = $293.75 [$352.50 x (10 /12)]
Book Value at Depreciation

Year Cost Beginning of Year Rate for Year
1 $705 $705 50%* $352.50
*Rate = (100%/Life) ´ 2
Rate = (1/4) ´ 2
Rate = 0.50
176. Computer equipment (office equipment) purchased 6 1/2 years ago for $170,000, with an estimated life of
8 years and a residual value of $10,000, is now sold for $60,000 cash. (Appropriate entries for depreciation had
been made for the first six years of use.) Journalize the following entries:
(a) Record the depreciation for the one-half year prior to the sale, using the straight-line method.
(b) Record the sale of the equipment.
(c) Assuming that the equipment had been sold for $25,000 cash, prepare the entry for (b) above to record the sale.
(a) Depreciation Expense-Office Equipment 10,000
Accumulated Depreciation-Office Equipment 10,000
(b) Cash 60,000

Office Equipment 170,000
Gain on Sale of Fixed Assets 20,000
(c) Cash 25,000

Loss on Disposal of Fixed Assets 15,000
Office Equipment 170,000
177. Machinery acquired at a cost of $80,000 and on which there is accumulated depreciation of $55,000
(including depreciation for the current year to date) is exchanged for similar machinery. For financial reporting
purposes, present entries to record the disposition of the old machinery and the acquisition of new machinery
under each of the following assumptions:
(a) Price of new, $120,000; trade-in allowance on old, $4,000; balance paid in cash.
(b) Price of new, $120,000; trade-in allowance on old, $34,000; balance paid in cash.
(a) Accumulated Depreciation-Machinery 55,000

Machinery 120,000
Loss on Disposal of Fixed Assets 21,000
Machinery 80,000
Cash 116,000
(b) Accumulated Depreciation-Machinery 55,000

Machinery 120,000
Machinery 80,000
Gain on Exchange of Machinery 9,000
Cash 86,000
178. Equipment acquired at a cost of $126,000 has a book value of $42,000. Journalize the disposal of the
equipment under the following independent assumptions.
a. The equipment had no market value and was discarded.

b. The equipment is sold for $54,000.
c. The equipment is sold for $24,000.
d. The equipment is traded-in for a similar asset. The list price of the new equipment is $63,000. The buyer gave no cash in the
exchange. The transaction lacks commercial substance.
Journal
Post Ref
Journal
Post Ref
a. Loss on Disposal of Fixed Asset 42,000
Accumulated Depreciation - Equipment 84,000
Equipment 126,000
b. Cash 54,000
Equipment 126,000
Gain on Disposal of Fixed Asset 12,000
c. Cash 24,000
Loss on Disposal of Fixed Asset 18,000
Equipment 126,000
d. Equipment (new equipment) 42,000

Equipment (old equipment) 126,000
179. Prepare the following journal entries and calculations:
(a) A patent that was acquired for $410,000 at the beginning of the current year expires in 15 years and is expected to have value for 4
years. Present the adjusting entry to amortize the patent for the current year.
(b) Mineral rights on an ore deposit estimated at 4,000,000 tons of ore were acquired for $2,800,000. Present the adjusting entry to record
depletion for the current year, during which 350,000 tons of ore were removed.
(c) Legal costs incurred to defend the rights that a patent provided in (a) were $60,000. At the time the patent had been in existence for 5
years. Determine the amount to be amortized for the current fiscal year.
(a) Amortization Expense-Patents 102,500

Patents 102,500
($410,000  4)
(b) Depletion Expense 245,000

Accumulated Depletion 245,000
(350,000 ´ $.70)
(c) $4,000 ($60,000  15)
180. Macon Co. acquired drilling rights for $7,500,000. The oil deposit is estimated at 37,500,000 gallons.
During the current year, 3,000,000 gallons were drilled. Journalize the adjusting entry at December 31, 2011 to
recognize the depletion expense.
Journal
Post Ref
Journal
Post Ref
Dec 31 Depletion Expense 600,000*
Accumulated Depletion 600,000
*Depletion rate = cost / estimated size

Depletion rate = $7,500,000/37,500,000
Depletion rate = $0.20
Depletion expense = depletion rate ´ quantity extracted

Depletion expense = $0.20 ´ $3,000,000
Depletion expense = $600,000
181. On July 1, 2010, Howard Co. acquired patents rights for $40,000. The patent has a useful life of 8 years
and a legal life of 15 years. Journalize the adjusting entry on December 31, 2010 to recognize the amortization.
Journal
Post Ref
Journal
Post Ref
Dec 31 Amortization Expense 2,500
Patents 2,500
182. On December 31 it was estimated that goodwill of $65,000 was impaired. In addition, a patent with an
estimated useful economic life of 10 years was acquired for $60,000 on July 1.
a) Journalize the adjusting entry on December 31 for the impaired goodwill.

b) Journalize the adjusting entry on December 31 for the amortization of the patent rights.
a)
Loss from Impaired Goodwill 65,000

Goodwill 65,000
b)
Amortization Expense - Patents 3,000
Patents 3,000
183. Clanton Company engaged in the following transactions during 2011. Record each in the general journal
below:
1) On January 3, 2011, Clanton purchased a copyright from Dalton Company with a cost of $250,000 with a
remaining useful life of 25 years.
2) On January 10, 2011, Clanton purchased a trademark from Felton Company with a cost of $700,000.
3) On July 1, 2011, Clanton purchased a patent from Garrison Company at a cost of $80,000. The remaining
legal life of the patent is 15 years and the expected useful life is 11 years.
4) On July 2, 2011, Clanton paid $30,000 in legal fees to defend the patent protection purchased on July 1,
2011.
5) Recorded the appropriate amortization for the intangible assets for 2011.
6) Clanton Company includes an asset in its ledger recorded when Clanton purchased a computer service
business at a price in excess of the fair value of the assets of the company in the amount of $400,000. At
December 31, 2011, $100,000 of this asset has become impaired.

Jan 3 Copyright 250,000
Cash 250,000
Jan 10 Trademark 700,000
Cash 700,000
July 1 Patent 80,000
Cash 80,000
July 2 Patent 30,000
Cash 30,000
Dec 31 Amortization - Copyright 10,000
Copyright 10,000
Dec 31 Amortization - Patent 5,000
Patent 5,000
Dec 31 Loss from Impaired Goodwill 100,000
Goodwill 100,000
Using straight line depreciation, prepare the journal entry to record depreciation expense for (a) the first year,
(b) the second year and (c) the last year.
$90,000/3 years = $30,000 per full year

$30,000/12 months = $2,500 per month
1st year - $2,500 x 7 months = $17,500
Last year - $2,500 x 5 months = $12,500
(a) Deprecitaion Expense 17,500

(b) Deprecitaion Expense 30,000

(c) Deprecitaion Expense 12,500

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1021
.
Id., serie III, an. I, p. 137.
1022
.
Id., loc. cit., p. 135.
1023
.
Si adduce anche la difficoltà degli apici o punti, come qualcuno li

chiama. Ma non è, come vedremo, obiezione insormontabile.
1024
.
Storia di Roma, ed. Desclée, etc. Roma alla fine del mondo antico p.
174. Roma 1908.
1025
.
Relativamente alla paleografia, gli scrittori che han giudicato la lapide

dagli esemplari che generalmente si trovano sui libri, non hanno del tutto
torto. L’hanno fatta irriconoscibile! Ognuno abbondò in sensu suo.
Perfino han posto sulla vocale I i punti rotondi. Cf. P. I, c. III di questo
studio.
1026
.
E la copia fatta dal Grimaldi sarà esatta?
1027
.
Non è dunque certo che avvenne allora.

1028
.
Dunque quelle due lapidi fanno eccezione alla regola. Dunque si dànno
eccezioni!
1029
.
Non è dunque del tutto certo.
1030
.
E fecero male; ma peggio ancora fanno quelli che mettono sugli I i punti
rotondi. Qui sta l’errore!
1031
.
E ciò è verissimo, nè noi diremo essere accenti.
1032
.
Come il Mommsen (c. I, l. X, 6524) credè potersi liberare dall’imbarazzo

in cui lo pose il Garrucci relativamente all’iscrizione Furfonense, di cui
tra breve parleremo.
1033
.
Zaccaria, Ist. lap. p. 388, edit. rom.
1034
.
Pag. 82, N. Z.
1035
.
Epit. S. Severae, p. 129.

1036
.
Marmor Pisan.
1037
.
Ma questa di Pisa, citata dal Zaccaria (Istit. lap. p. 338, ed. Rom.), non
ha i punti (Bormann C. I, L. XI, 1441).
1038
.
C. I, L. X, 6524.
1039
.
Sylloge Inscript. Lat. p. 290. Aug. Taurin. MDCCCLXXV.
1040
.
Loc. cit.
1041
.
Vol. I, tav. XII.
1042
.
Oltre a ciò il falsificatore del sec. XVII avrebbe usato punti tondi, mai
triangolari. Del resto esistono parecchie iscrizioni dei tempi di Urbano
VIII; eppure sull’I non v’è punto di sorta.
1043
.
Lo stesso Cabrol (Dictionnaire D’Archéologie chrétienne, voce

Amphithéatre, col. 1653, Paris, 1904), l’ha riprodotta in caratteri comuni
e senza apici.
1044
.
Anche ammesso che il musaicista al rifare l’iscrizione «Ego sum via,

veritas et vita» avesse aggiunto arbitrariamente i punti sugl’I, non per
questo l’iscrizione sarebbe falsa, ma una riproduzione genuina e verace
dell’iscrizione primitiva. A tutti nota è l’iscrizione damasiana che dice:
HIC HABITASSE PRIVS, etc. I due primi esametri di questo carme si
leggono nel sepolcro apostolico dell’Appia, e sono una riproduzione fatta
nel secolo XII. Ora se le sillogi, e specialmente il codice di Einsiedeln,
non ci avessero conservato quel carme, la critica moderna avrebbe
ritenuti quei due esametri per una falsificazione di quel secolo. Eppure è
una riproduzione genuina!
1045
.
Loc. cit. p. 146.
1046
.
Ripostigli, p. 198.
1047
.
Ann. Inst. XII, p. 241.
1048
.
Intorno ad alcuni monumenti antichi esistenti al IV miglio dell’Appia.

Roma 1882, pagina 63.
1049
.
De Rossi, Bull. Archeol. Anno I, pp. 23 e 50.

1050
.
M. Armellini, Lez. ecc. 101. «Col 426, egli dice, la sepoltura cessò nei
sotterranei e incominciò nei portici e intorno le basiliche ma fuori del
tempio, onde S. Gregorio Magno, come narra nel l. IV dei dialoghi,
ricorda che i portici del Vaticano si trasformarono in cimiteri.... Lo
splendore delle nostre necropoli ebbe un crollo spaventevole quando
dopo caduta nel 410, di memoria imperitura, la regina del mondo in
mano di Alarico».
1051
.
O al più nel secondo decennio.
1052
.
Cf. P. Scaglia, l. c., p. 52. Questo stesso ch. scrittore a p. 10, dice: De
forma litterarum nihil dicendum, nisi quod eadem est atque in ethnicis
epitaphiis, sed multo deterior propter lapicidarum imperitiam.
1053
.
Fabbretti, Inscript., c. V, p. 363.
1054
.
Maffei, Art. crit. lap. l. III, c. II, p. 175.
1055
.
Morcelli, De stil. Inscript., l. II, part. 3, c. IX, p. 462, vol. 2.
1056
.
Cf. Garrucci, Sill. Inscript., p. 52, 75, 86, 88, 91, 92. — Pizzamiglio,
Storia della Moneta Rom.
1057
.
Garrucci, loc. cit., pp. 185-192, 215.
1058
.
Cf. Bruzza, Bull. dell’Ist. Arch., an. 1870.
1059
.
Dissert. VIII, p. 164.
1060
.
Inscript. Christ., Tom. I, p. 114, p. V.
1061
.
Scaligero, Cf. Red. var. lect., c. XIX, not. ad lib. V, Varr. de ling. lat.
1062
.
Cf. Specimen., p. 56.
1063
.
Cf. Cenot. Pis., dis. IV, quest. 2.
1064
.
Cf. Epit. S. Severae, p. 183.
1065
.
Pag. 138.
1066
.
Cf. Instituzioni, l. II, c. XI; p. 320.
1067
.
Cf. Fabretti, Inscript., p. 110, vol. V, p. 541, n. 278. Bull. A. C. Tom. III,
pagina 151 ecc.
1068
.
P. G. Marchi, Monumenti delle arti crist. primit., p. 116. Roma 1844.
1069
.
Gruter, p. 553, n. 2.
1070
.
De Rossi, Bull. Arch. crist. an. III, p. 12.
1071
.
Marangoni, App. agli atti di S. Vittorino, p. 168.
1072
.
Grut., loc. cit.
1073
.
De Stil. Inscript., l. III, p. III, c. VIII.

1074
.
Pag. 49.
1075
.
Arv. p. 37.
1076
.
Orig. I, XX.
1077
.
Graffiti di Pompei, p. 47.
1078
.
Grut., 1019, 4.
1079
.
Murat., 918, 2.
1080
.
Loc. cit., lib. III, c. II, p. 172.
1081
.
Cf. Civiltà Catt., Serie IX, Vol. XII, p. 718, § 2. V. anche il P. Scaglia,
Not. archeol. crist. Vol. II, pars prima. Epigrafia, pp. 8-9, il quale, dopo
avere riportato un po’ di errori più comuni nelle epigrafi, aggiunge:
integrum possem librum replere idiotismis et erroribus omnimodis....
1082
.
Hist. nat., l. XXXV, c. IX, in fine.
1083
.
Storia della Lett. Ital. Tom. I, p. 8, ed. Napol.
1084
.
Cap. XVII, p. 37.
1085
.
Loc. cit.
1086
.
Liv. lib. I, 28.
1087
.
Garrucci, loc. cit., p. 166.
1088
.
Varr. l. VI, de l. l.
1089
.
Fabbretti, Inscript.
1090
.
Nibby, Analisi ecc. Tom. III, p. 141.

1091
.
Zaccaria, Instit. p. 187; Bull. dell’Ist. 1865, p. 84.
1092
.
Bull. dell’Ist., 1860, p. 258.
1093
.
Id., 1868, p. 228.
1094
.
Inscript. Christ., Tom. I, p. 112.
1095
.
Ammessa la genuinità della lapide, si dovrà pur ammettere, come

vedremo, che Gaudenzio fu l’architetto del Colosseo.
1096
.
Supponendo che fosse già cristiano.
1097
.
Tale infatti fu l’idea primitiva, come dice Marziale:
Hanc unam norint saecula naumachiam.
1098
.
Memorie storiche del Colosseo, p. 23, ed. 2.ª

1099
.
Note al Venuti, Roma Ant. Venuti-Piale, Descriz. topogr. di Roma,

1824, tom. I, p. 51.
1100.
Dio., l. LXVII.
1101.
Anche tralasciando l’indizio estrinsico della forma della lapide, che è

cimiteriale; anche prescindendo dalla testimonianza degli scrittori, coevi
al rinvenimento di essa, i quali dicono che fu tratta fuori dal cimitero di S.
Agnese; le parole Kristus, etc., dichiarano apertamente la cristianità di
Gaudenzio.
1102.
Xiph. e Dione, Traianus, p. 553, Ed. Basileae apud Joannem Oporinum.
1103.
Dopo quello del Panvinio e dell’Iansoni, un catalogo molto ragionato e

stimato fu pubblicato dal Contelori, ed un altro, ancora più accurato, dal
Corsini.
1104.
Loc. cit.
1105.
V. Parte I, c. III di questo lavoro.

1106.
Vitr., Praef. I. VII.
1107.
Plinio, l. VII, c. XXXVII. Vitr., l. c.
1108.
Lib. VI, c. XXXVII.
1109.
Lib. XXXVI, c. XIII. Laberinto italico. Monumento sepolcrale di Porsenna

re di Chiusi. V. Less. ragionato. Lübker.
1110.
Suida. Plinio l. XXXVI, II.
1111.
Xiph., in Adr.
1112.
Vitr., l. c.
1113.
Spart., in Adrian.
1114.
Lib. VIII.
1115.
Lib. IX, epist. XXXIX.

1116.
Plinio XXXIII, c. XV.
1117.
Epigr. LVI, l. VII.
1118.
Loc. cit.
1119.
Ad esempio S. E. il Card. Lugari e il suo fratello Cav. Bernardo,

ambedue membri ordinari dell’Accademia Romana di Archeologia e
notissimi per loro dotte pubblicazioni archeologiche.
1120.
V. Forcellini, voce Theatrum: de quocumque loco ad edenda

spectacula apto.
1121.
Che i liberti servissero agli imperatori, anche come architetti è

certissimo, e si deduce da parecchie lapidi sepolcrali: Cf. c. I. l. VI, 8722,
8724.
1122.
Venuti-Piale, Descriz. top. di Roma. Tom. I, p. 51. Roma 1824.
1123.
Il De Rossi, già si avvide che i martirologî omettono martiri rivelatici

dalle iscrizioni (V. Bull. Arch. Crist. An. 1876, p. 59; 1877, pp. 109-113;
1878, pp. 12-94-95; an. 1883, pp. 151-152-155; 1886, pp. 26-28, ecc.).
1124.
Cf. Migne, P. L. vol. 124, p. 31.

1125.
Quel Passio e quell’S sono certamente del tempo in cui visse il

trascrittore.
1126.
De lingua latina, l. IV.
1127.
Cf. Jordan., Topog. Varr. l. l., V, 49, 50, pp. 601-602. Oppius mons
princeps Esquilis, cis lucum Fagutalem.... Oppius mons terticeps, cis
lucum.... Oppius mons quarticeps, cis lucum.... in figulinis est. Cespius
mons quarticeps cis lucum Poetelium, Esquilis est.
1128.
Il primo le Coniectanea, gli altri due le annotazioni ed emendazioni.
1129.
V. Nibby, Roma Antica, Tom. I, p. 21.
1130.
I boschi sacri dell’antica Roma. Estratto dal «Bullettino della Com. arch.
comunale», fasc. II, an. 1905, p. 14.
1131.
Nel documento seguito dai dotti passati, fino alla metà del secolo
scorso, effettivamente non manca, ed oh quanto è più conforme alla
topografia locale!
1132.
Loc. cit., l. IV.
1133.
Varron. loc. cit.

1134.
Del suolo fisico di Roma, ecc. Cosenza, Tip. di Giuseppe Migliaccio,

1869.
1135.
Così negli Argei secondo Varrone.
1136.
La mia opinione circa le «velocia munera» la manifestai alla Parte II,

cap. I, di questo lavoro.
1137.
Antich. di Roma, vol. I, l. III, p. 94.
1138.
È certo però che al settimo miglio della Via Salaria vi fu una chiesa
dedicata all’Arcangelo Michele; le parole dell’Epitome libri de locis
Sanctorum Martyrum, sono chiare: «Per eandem quoque viam venitur
ad ecclesiam S. Michaelis septimo milliario ab urbe;» ma è pur certo che
varie furono in Roma le chiese dedicate a questo Arcangelo, come: S.
Arcangelo ad Elephantum, in Palliano, inter nubes, in Augusta, in
Laterano, in vico Patricio, in Via Appia, ecc. (Cf. Nuov. Bull. di Arch.
christ. 1910, pag. 84 e segg. «Studio sulla nuova silloge di Cambridge di
O. Marucchi»).
Il Martirologio Geronimiano (codice di Berna) colloca la Chiesa di S.
Michele non al VII ma al VI miglio.
1139.
O in Ortheo. Cf. La Pianta di Roma dell’Anonimo Einsidlense. Dissert.

letta dal Prof. C. Huelsen, 21 Aprile 1906, nella Pont. Accad. Romana di
Archeologia. — Estratto pagina 28.
1140.
Tutti sappiamo che una chiesa dedicata a questa Santa era sotto
l’Esquilino. Il ch.o Huelsen, loc. cit., dice che questa chiesa è
sconosciuta!
1141.
Lib. Pont. Edit. Duchesne, Tom. II, p. 24. Il Grimaldi legge «in
Aventino», ed opina sia lo stesso che il monastero di S. Maria in
Aventino.
1142.
Ediz. Duchesne, Tom. I, p. 262.
1143.
Lib. Pont. p. 268, n. 36.
1144.
Loc. cit. Tom. II, p. 41 n. 63.
1145.
V. G. Starra-Tedde, I boschi sacri, loc. cit.
1146.
Cf. il period. «Buonarroti» Tom. V, p. 68.
1147.
C. Fontana: L’Anfiteatro Flavio descritto e delineato. Aia 1725.
1148.
Marangoni: Delle memorie sacre e profane dell’Anfiteatro Flavio, ecc.

Roma 1745, seconda ediz. 1847.
1149.
Roma ant. Tom. I, pag. 529 e segg.
1150.
Tocco Efisio: Dell’Anf. Flav.... e dei gladiat. Apud Buonarroti, luglio

1869, marzo-aprile 1870.
1151.
F. Gori: Le mem. stor. etc. dell’Anf. Fl. Roma 1874.
1152.
Iusti Lipsi: De anphitheatro etc.
1153.
Degli Anfiteatri.... Verona 1727.
1154.
Memoire sur les anciens monuments de Rome: apud Mém. Acad.

Inscript. et belles lettres: XXVIII, pag. 486. Voyage en Italie: pag. 346 sg.
1155.
L’Anf. Campano illust.... col paragone di tutti gli anfiteatri d’Italia. Napoli
1842.
1156.
Edif. di Roma ant. 1851, vol. III, p. 23 seg. vol. IV. Tav. 164-177. Cf.
etiam: Archit. Ant. III, s. III. t. 119.
1157.
Arvali pag. 225 sg. (Henzen: Arv. CVI).
1158.
Osserv. sull’arena e sul podio dell’Anf. Flav. Roma 1813 — Nuove oss.
ecc. e dell’acqua che lo ricopre. 1814 — Notiz. degli scavi Roma 1813
— Ammonizioni critico-ant. 1813 — Diss. sulle rovine di Roma, ap.
Winckelmann — Storia delle arti, III, 393 seg. — Note al circo di
Caracalla del Bianconi.
1159.
Delle linee dei sedili apud Efemm. Litt. Roma 1823.

1160.
Iscrizioni esistenti sui sedili dei teatri e degli anfiteatri antichi. Ann. Inst.
1856.
1161.
Ann. Inst. 1859.
1162.
Iscriz. dell’Anf. Flavio, Bull. com. di Roma, 1880 pag. 211. e seg. —
Notizie ined. sull’Anf. Flavio, R. Acc. dei Lincei, serie quinta, vol. V, ecc.
1163.
Delle tessere.... ed. Labers, Milano 1827.
1164.
Archit. numism. Londra 1859.
1165.
L’Anfiteatro Flavio rivendicato ai Martiri. Atti della Pont. Acc. Rom. di

Archeol. serie II, Tom. VII, 1899. Questo discorso fu probabilmente
motivato dalla dissertazione, comparsa anonima, del Delehaye
(L’Amphitéâtre Flavien, Bruxelles 1897), nella quale questi sostiene che
nessuna fonte attesta essere stato il Colosseo un luogo di martirio pei
cristiani.
1166.
Antonio Sebastiani.
1167.
Nell’archivio capitolino (Cred. 4, tom. 101, pag. 291) v’è un documento

che dice: «Anno 1727, 12 Novembre. Istrumento di concessione, per
poter affittare l’erbe che nascono dentro al Colosseo».
1168.
Flora of the Coloseum of Rome. London, Groombridge and Sons.

1169.
F. Gori, loc. cit. pag. 113.
1170.
Ann. Inst. 1856.
1171.
Bull. della Comm. arch. comun. di Roma 1880.
1172.
Inscript. Urb. Romae Latinae. Partis quartae fasciculus posterior. —

Additamenta, collegit et edidit Christianus, Huelsen, Berolini, apud
Georgium Reimerum, pag. 3199 e segg. MCMII.
1173.
Lanciani, loc. cit., p. 244-45.
1174.
Dividiamo i frammenti con una linea ed omettiamo i supplementi che si

leggono nello stesso Corpus, perchè, o questi sono facili, come ad es.:
pl ACIDI — ed ognuno può farli da sè: o sono di difficile interpretazione;
e allora è meglio che ognuno faccia i supplementi che creda.
1175.
Loc. cit., p. 217.
1176.
Huelsen, c. I, l. VI, pars 4 add., p. 3224.

Nota del Trascrittore
Ortografia e punteggiatura originali sono state

mantenute, correggendo senza annotazione minimi
errori tipografici.
Le correzioni indicate a pag. 385 (Errata-Corrige) sono
state riportate nel testo.
Per trascrivere la lettera "V" sormontata da un accento si
è usata la notazione "V´".
Copertina creata dal trascrittore e posta nel pubblico
dominio.

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4. Land acquired as a speculation is reported under Investments on the balance sheet.

14. The cost of replacing an engine in a truck is an example of ordinary maintenance.

17. An intangible asset is one that has a physical existence.

21. The normal balance of the accumulated depreciation account is debit.

32. The double-declining-balance method is an accelerated depreciation method.

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

67. A characteristic of a fixed asset is that it is

71. Which of the following is included in the cost of land?

72. Accumulated Depreciation

77. A capital expenditure results in a debit to

78. Which of the following below is an example of a capital expenditure?

80. All leases are classified as either

91. The most widely used depreciation method is

96. Residual value is also known as all of the following except

98. Expected useful life is

119. The accumulated depletion account is

126. The exclusive right to use a certain name or symbol is called a

127. Fixed assets are ordinarily presented in the balance sheet

Land purchase price $178,000

a) What was the depreciation expense for the first year?

a) Determine the gain to be recorded on the exchange.

a. Determine the depletion rate.

(2) Journalize the adjusting entry to recognize the depletion expense.

a) Determine the Fixed Asset Turnover for 2012 and 2011.

Company A Company B Company C Company D

2) Record the journal entry for the sale of the machinery.

(1) Cost of paving parking area for employees and customers.

163. Journalize each of the following transactions:

a. Replaced a broken window.

(Round the answer to the nearest dollar.)

(Round the answer to the nearest dollar.)

(a) Calculate the depreciation expense per hour of operation.

Architects’ Fees $45,000

a. The equipment had no market value and was discarded.

179. Prepare the following journal entries and calculations:

a) Journalize the adjusting entry on December 31 for the impaired goodwill.

Date Description Debit Credit

4. Land acquired as a speculation is reported under Investments on the balance sheet.

14. The cost of replacing an engine in a truck is an example of ordinary maintenance.

17. An intangible asset is one that has a physical existence.

21. The normal balance of the accumulated depreciation account is debit.

32. The double-declining-balance method is an accelerated depreciation method.

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

67. A characteristic of a fixed asset is that it is

71. Which of the following is included in the cost of land?

72. Accumulated Depreciation

77. A capital expenditure results in a debit to

78. Which of the following below is an example of a capital expenditure?

80. All leases are classified as either