Practice Quiz - Long-term Assets: Fixed and Intangible Problem 1 The following payments and receipts are related to Land, Land Improvements, and Buildings: 1. Finder's fee paid to real estate agency $ 4,000 2. Cost of real estate acquired as Plant site $400,000 3. Fee paid to attorney for title search $ 2,500 4. Delinquent real estate taxes, assumed by purchaser $ 31,750 5. Architects and engineers fees for plans $36,000 6. Cost of removing building on land purchased $ 10,000 7. Proceeds from sale of materials from demolished building $ 3,000 8. Cost of filling and grading land $ 15,200 9. Insurance premium during building construction $ 5,400 10. Money borrowed to pay building contractor $600,000 11. Cost of extending water main to property $ 9,000 12. Cost of constructing sidewalks and curbs $ 13,200 13. Cost of repairing vandalism damage during construction $ 3,000 14. Cost of trees and shrubs planted $ 12,000 15. Cost of paving parking lot $ 14,500 16. Interest on loan for building construction $ 33,000 17. Property taxes on building due one year after completion $ 5,000 18. Cost of lights for parking lot $ 12,000 19. Cost of insuring building for one year after completion $ 7,500 20. Gardening and mowing fees $ 4,000 Using the information above, assign each amount to Land, Land Improvements, Building or Other Accounts Land Land Improvements Building Problem 2 ABC Company purchases a machine on January 1, 2012 for $45,000 with an estimated residual value of $3,000 and useful life of seven years. Use the straight-line method. 1. Prepare the journal entry to record depreciation for 2014. 2. If possible, compute the net book value at the end of 2014. 3. If the machine is sold for $24,000 at the end of 2014, prepare the journal entry to record the disposal. I Problem 3 DEF Company purchases a vehicle on January 1, 2013 for $60,000 with an estimated residual value of $6,000 and useful life of 90,000 miles. Use the units-of-activity method. 1. Prepare the journal entry to record depreciation for 2015 if the truck is driven 10,000 miles in that year 2. If possible, compute the net book value at the end of 2015. 3. If possible, compute the net book value at the end of 2015 if the vehicle was driven 20,000 and 30,000 miles in 2013 and 2014, respectively. Problem 4 XYZ Company purchases a machine On January 1, 2014 for $100,000 with an estimated residual value of $10,000 and useful life of four years. Use the double-declining balance method. 1. Prepare the journal entry to record depreciation for 2016. 2. If possible, compute the carrying value at the end of 2016. 3. Determine the amount of depreciation expense in 2017. Problem 5 LMN Company purchased another company on January 1, 2015, resulting in the recording of goodwill of $2,000,000 and a patent valued at $120,000. The patent has a remaining life of 10 years. At December 31, 2015, it was determined that an impairment in the value of the goodwill of $500,000 had occurred. 1. Prepare any necessary journal entries affecting the goodwill and patent accounts at December 31, 2015
