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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The journal entry to record costs related to extraordinary repairs would include a __________ to __________.
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What is the depreciable cost of a building acquired at $1,450,000 with a residual value of $300,000?
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What is the straight-line rate for a building with a cost of $1,450,000 and a useful life of 10 years?
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What is the annual straight-line depreciation for a building with a depreciable cost of $1,150,000 and a useful life of 10 years?
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Calculate the depreciable cost of a truck with a cost of $69,000 and a residual value of $12,000.
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What is the depreciation rate if a truck was driven 77,000 miles with a total estimated useful life of 300,000 miles?
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What is the units-of-activity depreciation for a truck driven 77,000 miles?
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What is the double-declining-balance rate for a building acquired at a cost of $1,375,000 with a residual value of $250,000?
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What is the double-declining-balance depreciation for the first year for a building costing $1,375,000?
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Study Notes
Accounts Receivable
- Accounts receivable is not a fixed asset; fixed assets include buildings, trucks, and land.
Investment
- Long-lived purchased items not used in normal operations are classified as investments, not fixed assets or expenses.
Land
- Land is not depreciated, while buildings, trucks, and equipment are considered depreciable fixed assets.
Depreciable Cost
- Depreciable cost is calculated as the difference between an asset's initial cost and its residual value.
Double-declining-balance Method
- The double-declining-balance method is recognized as an accelerated depreciation method compared to the straight-line and units-of-activity methods.
Extraordinary Repairs
- To record costs for extraordinary repairs, the journal entry includes a debit to Accumulated Depreciation.
Example of Building Depreciation
- A building's depreciable cost is $1,150,000, with a straight-line depreciation rate of 10%. The annual straight-line depreciation amounts to $115,000.
Example of Truck Depreciation
- For a truck costing $69,000, the depreciable cost is $57,000, with a depreciation rate of $0.19 per mile. The units-of-activity depreciation for a year with 77,000 driven miles is $14,630.
Double-declining-balance Depreciation Example
- A building's double-declining-balance rate is 5%, leading to a first-year depreciation of $68,750 on a cost of $1,375,000 with an estimated residual value of $250,000 and a useful life of 40 years.
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Description
Test your knowledge of key accounting terms with these flashcards from Chapter 10. Covering essential concepts like Accounts Receivable and Investments, this quiz will help reinforce your understanding of fixed assets and their classifications. Perfect for students and professionals looking to review accounting principles.
