Tangible and Intangible Assets

Depreciation and maintenance are expenses associated with the use of long-lived assets.

• True

• False

The gain or loss resulting from the disposal of a long-lived asset appears below the "operating income" line on the Income Statement.

• True

• False

Ordinary repairs and maintenance always:

• are part of the asset cost of equipment and facilities.

• are recorded as expenses.

• are recorded as liabilities.

• improve the asset beyond the current accounting period.

When a company records depreciation expense it debits:

• liabilities and credits expenses.

• depreciation and credits cash.

• depreciation and credits a contra-asset account.

• long-lived assets and credits expenses.

Research and development costs are treated as a capital asset.

• True

• False

Intangibles with unlimited or indefinite lives (trademarks and goodwill) are amortized using straight-line depreciation method.

• True

• False

Which of the following methods would be a typical choice for assets that are most productive when they are new but lose their utility quickly as they get older?

• Straight-line method

• Double-declining-balance method

• Units-of-production method

• Depletion

Which of the following is an example of an intangible asset?

• Machinery

• Land

• Equipment

• Goodwill