is four years. What should Spiro report as the asset's carrying amount
as of December 31, 2005?
11. A depreciable asset has an estimated 15% salvage value. Under
which of the following methods, properly applied, would the
accumulated depreciation equal the original cost at the end of the
asset’s estimated useful life?
12. What amount should Ichor report as depreciation expense for
2005?
13. Grayson Co. incurred significant costs in defending its patent
rights. Which of the following is the appropriate treatment of the
related litigation costs?
14. On April 1, 2004, Kew Co. purchased new machinery for
$300,000. The machinery has an estimated useful life of five years,
and depreciation is computed by the sum-of-the-years'-digits method.
The accumulated depreciation on this machinery at March 31, 2006
should be:
15. Stam Co. incurred the following research and development project
costs during the current year:
16. The equipment has a five-year useful life and is depreciated using
the straight-line method. What amount should Stam recognize as
research and development expense at year end?
17. Star Co. leases a building for its product showroom. The 10-year
non-renewable lease will expire on December 31, 2007. In January
2002, Star redecorated its showroom and made leasehold
improvements of $48,000. The estimated useful life of the
improvements is 8 years. Star uses the straight-line method of
amortization. What amount of leasehold improvements, net of
amortization, should Star report in its June 30, 2002, Balance Sheet?
18. A company recently acquired a copyright that now has a
remaining legal life of 30 years. The copyright initially had a 38-year
useful life assigned to it. An analysis of market trends and consumer
habits indicated that the copyrighted material will generate positive
cash flows for approximately 25 years. What is the remaining useful