For each of the following long-lived assets, indicate its nature and related cost allocation concept. Use the following symbols:

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The following information was reported by Cutter’s Air Cargo Service for 2007:

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Compute the company’s fixed asset turnover ratio for the year. What can you say about Cutter’s ratio when compared to Southwest’s 2007 ratio?

For each of the following items, enter the correct letter to the left to show the type of expenditure. Use the following:

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Calculate the book value of a three-year-old machine that cost $21,000, has an estimated residual value of $1,000, and has an estimated useful life of four years. The company uses straight-line depreciation.

Calculate the book value of a three-year-old machine that cost $25,000, has an estimated residual value of $5,000, and has an estimated useful life of five years. The company uses double-declining-balance depreciation. Round to the nearest dollar.

Calculate the book value of a four-year-old machine that cost $21,000, has an estimated residual value of $1,000, and has an estimated useful life of 20,000 machine hours. The company uses units-of-production depreciation and ran the machine 3,200 hours in year 1, 7,050 hours in year 2, and 7,500 hours in year 3.

For each of the following scenarios, indicate whether an asset has been impaired (Y for yes and N for no) and, if so, the amount of loss that should be recorded.

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As part of a major renovation at the beginning of the year, Mullins’ Pharmacy, Inc., sold shelving units (store fixtures) that were 10 years old for $3,000 cash. The original cost of the shelves was $6,000 and had been depreciated on a straight-line basis over an estimated useful life of 13 years with an estimated residual value of $800. Record the sale of the shelving units.

Elizabeth Pie Company has been in business for 30 years and has developed a large group of loyal restaurant customers. Bonanza Foods made an offer to buy Elizabeth Pie Company for $5,000,000. The book value of Elizabeth Pie’s recorded assets and liabilities on the date of the offer is $4,300,000 with a market value of $4,500,000. Elizabeth Pie also (1) holds a patent for a pie crust fluting machine that the company invented (the patent with a market value of $200,000 was never recorded by Elizabeth Pie because it was developed internally) and (2) estimates goodwill from loyal customers to be $310,000 (also never recorded by the company). Should Elizabeth Pie Company management accept Bonanza Foods’ offer of $5,000,000? If so, compute the amount of goodwill that Bonanza Foods should record on the date of the purchase.

Wagner Company had the following activities for the year ended December 31, 2011: Sold land for cash at a cost of $16,000. Purchased $81,000 of equipment, paying $76,000 in cash and the rest on a note payable. Recorded $2,500 in depreciation expense for the year. Net income for the year was $11,000. Prepare the operating and investing sections of a statement of cash flows for the year based on the data provided.