Questions and Answers
All of the following are considered fixed assets EXCEPT:
If a purchased item is long-lived but not used in normal operations, the asset is classified and recorded as a(n):
All of the following fixed assets are depreciated EXCEPT:
The difference between a fixed asset's initial cost and residual value is known as its:
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Which of the depreciation methods is called an accelerated depreciation method?
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Assume that equipment acquired at a cost of $10,000 is fully depreciated. On June 30, the equipment is discarded. The entry to record the discard would be to debit __________ and credit __________.
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The entry to record the sale of equipment at book value would include a __________ to __________.
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The entry to record the amortization of a patent would include a debit to __________ and a credit to __________.
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The exclusive right to publish and sell a literary, artistic, or musical composition is granted by a:
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Cost less accumulated depreciation equals:
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Accumulated depreciation would be shown on which financial statement?
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Study Notes
Fixed Assets
- Fixed assets include buildings, trucks, and land, but accounts receivable are not classified as fixed assets.
- Long-lived items that are not used in normal operations are recorded as investments.
Depreciation
- Land is not depreciated, whereas buildings, trucks, and equipment are subject to depreciation.
- Depreciable cost is calculated as the difference between an asset's initial cost and its residual value.
Depreciation Methods
- The double-declining-balance method is recognized as an accelerated depreciation method, differing from the straight-line and units-of-activity methods.
Discarding and Selling Equipment
- To record the discard of fully depreciated equipment, debit Accumulated Depreciation—Equipment and credit Equipment.
- When equipment is sold at book value, include a debit to Accumulated Depreciation.
Amortization
- The amortization of a patent requires a debit to Amortization Expense and a credit to Patents.
Copyrights
- Copyrights grant exclusive rights to publish and sell literary, artistic, or musical compositions.
Book Value
- Book value is determined by subtracting accumulated depreciation from the cost of an asset.
Financial Statements
- Accumulated depreciation is listed on the balance sheet, indicating the total depreciation taken against fixed assets up to a specific date.
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Description
Prepare for your Accounting Exam 3 with this quiz on fixed assets. Test your knowledge on classifications and characteristics of long-lived assets. Perfect for reviewing chapter 9 material!
