Question 15: The Steel You Blind Company hires a bookkeeper who says that intangible assets can only

 
   

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Question 15: The Steel You Blind Company hires a
bookkeeper who says that intangible assets can only be amortized over their
legal lives. Is she right or wrong and
why?

Chapter 10
Answer:
The intern is not correct. The cost of an intangible asset should be
amortized over that asset’s useful life (the period of time when operations are
benefited by use of the asset). In addition, some intangibles have indefinite
lives and therefore are not amortized at all.

Exercise 10-6 Modified
We Move Ya moving company purchased a new
cross country moving truck and trailer on July 1, 2015. The cost of the new equipment was $150,000. The truck and trailer is expected to have a 5
year useful life and a salvage value of $12,000. The truck is a diesel and is expected to have
a useful life of 10,000 hours.

Computer the depreciation expense under the
following scenarios:
(a)
Straight line for 2015.
(b)
Units of Activity for 2015
assuming 1,700 hours of on-road use.
(c)
Double declining balance using
twice the straight line rate for 2015 and 2016.