AccountingBLOCK - Accounting Forums - View Single Post - Few multiple choice questions about fixed assets

tonalin · 03-19-2008, 07:06 PM

I have few multiple choice questions here. I believe I am right on most of these but if someone can check, I will be glad. My answers are in bold...

If a fixed asset is sold and the book value is greater than cash received, the company must

Recognize a loss on the income statement under other expenses
Recognize a loss on the income statement under operating expenses
Recognize a gain on the income statement under other revenues
Gains and losses are not to be recognized upon the sale of fixed assets

A gain is recorded on the sale of fixed assets when

The asset is sold for a price less than its book value
The assets book value is less than the cash received
A gain on sale is not permitted to be recognized
Accumulated depreciation is less than the cash received

Intangible assets are used in operations but

Cannot be specifically identified
Cannot be sold
Lack physical substance
Cannot be long-lived.

A patent was purchased for $670,000 with a legal life of 20 years. Management estimates that the patent has an 8 year economic life. The journal entry to record amortization would include a

Debit to amortization expense for $33,500
Debit to research and development expense for $670,000
Credit to patent for $83,750
Credit to accumulated amortization for $670,000

Which of the following is NOT a fixed asset?

Equipment
Buildings
Land
All of these are correct

03-19-2008, 07:06 PM	#1 (permalink)
tonalin Status: n00b Join Date: Mar 2008 Posts: 13 Credits: 270	Few multiple choice questions about fixed assets I have few multiple choice questions here. I believe I am right on most of these but if someone can check, I will be glad. My answers are in bold... If a fixed asset is sold and the book value is greater than cash received, the company must Recognize a loss on the income statement under other expenses Recognize a loss on the income statement under operating expenses Recognize a gain on the income statement under other revenues Gains and losses are not to be recognized upon the sale of fixed assets A gain is recorded on the sale of fixed assets when The asset is sold for a price less than its book value The assets book value is less than the cash received A gain on sale is not permitted to be recognized Accumulated depreciation is less than the cash received Intangible assets are used in operations but Cannot be specifically identified Cannot be sold Lack physical substance Cannot be long-lived. A patent was purchased for $670,000 with a legal life of 20 years. Management estimates that the patent has an 8 year economic life. The journal entry to record amortization would include a Debit to amortization expense for $33,500 Debit to research and development expense for $670,000 Credit to patent for $83,750 Credit to accumulated amortization for $670,000 Which of the following is NOT a fixed asset? Equipment Buildings Land All of these are correct

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