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Exam 7: Long-Term Assets

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Question 21

True/False

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A basket purchase is the purchase of more than one asset at the same time for one purchase price.

A) True
B) False

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Question 22

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The legal life of a patent is:

A) Forty years.
B) Twenty years.
C) Life of the inventor plus fifty years.
D) Indefinite.

E) A) and C)
F) A) and B)

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Question 23

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Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term placing the letter designating the term in the space provided. a.Patent b.Copyright c.Trademark d.Franchise e.Goodwill Phrases: _____ An exclusive right of protection given to the creator of a published work such as a song,film,painting,photograph,book,or computer software. _____ Payment for the exclusive right to use the company's name and to sell its products within a specified geographical area. _____ The purchase price of a company less the fair value of the net assets acquired. _____ An exclusive right to manufacture a product or to use a process. _____ A word,slogan,or symbol that distinctively identifies a company,product,or service.

International accounting standards allow firms to record development costs that benefit future periods as an intangible asset.

Northwest Catering owns and operates several restaurant services in Oregon,Washington,and Idaho.One restaurant chain has experienced sharply declining profits.The company's management has decided to test the operational assets for possible impairment.The relevant information for these assets is presented below: Determine the amount of the impairment loss,if any.

Research and development costs incurred in developing a patent internally are not recorded as an intangible asset in the balance sheet,but rather are expensed directly in the income statement.

Using the straight-line method,the book value at December 31,2015 would be:

Cash received from the sale of salvaged materials increases the total cost of land.

Using the straight-line method,depreciation expense for 2016 and the book value at December 31,2016 would be:

With the straight-line depreciation method,we allocate an equal amount of the depreciable cost to each year of the asset's service life.

Bricker Enterprises purchased a machine for $100,000 on October 1,2015.The estimated service life is ten years with a $10,000 residual value.Bricker records partial-year depreciation based on the number of months in service.Depreciation expense for the year ended December 31,2015,using straight-line depreciation,is:

We allocate natural resources to expense through a process known as "depletion."

The CEO,as head of the company,is ultimately responsible for the firm's accounting.

Gains on the sale of fixed assets for cash:

We record purchased intangible assets at their original cost plus all other costs necessary to get the asset ready for use.

Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term placing the letter designating the term in the space provided. a.Accumulated depreciation b.Book value c.Depreciation d.Residual value e.Service life Phrases: _____ Also referred to as salvage value,is the amount the company expects to receive from selling the asset at the end of its service life. _____ Allocating the cost of a tangible asset over its service life. _____ Equal to the original cost of the asset minus the current balance in accumulated depreciation. _____ A contra-asset account representing the total depreciation taken to date. _____ How long the company expects to receive benefits from the asset before disposing of it.

Straight-line produces a lower net income than accelerated methods in the earlier years of an asset's life.

Straight-line,declining-balance,and activity-based depreciation all are acceptable depreciation methods for both financial reporting and tax reporting.

Productive assets that are physically used up,or depleted are:

A word,slogan,or symbol that distinctively identifies a company,product,or service is a: