Question: 1. Both the initial cost of the asset and the accumulated depreciation will be taken off the books with the disposal of the asset.
True or False
2. Which of the following should be included in the acquisition cost of a piece of equipment?
A. transportation costs
B. All of these choices are correct.
C. installation costs
D. testing costs prior to placing the equipment into production
3. Expenditures that add to the utility of fixed assets for more than one accounting period are
A. capital expenditures
B. utility expenditures
C. committed expenditures
D. revenue expenditures
4. Which of the following below is an example of a capital expenditure?
A. tune-up for a company truck
B. replacing all burned-out light bulbs in the factory
C. replacing an engine in a company car
D. cleaning the carpet in the front room
5. Which of the following are criteria for determining whether to record an asset as a fixed asset?
A. must be short lived and tangible
B. must be an investment and long lived
C. must be long lived and used by the company in its normal operations
D. must be tangible and an investment
6. The calculation for annual depreciation using the straight-line depreciation method is
A. Depreciable cost Ã- Estimated useful life
B. Initial cost Ã- Estimated useful life
C. Initial cost / Estimated useful life
D. Depreciable cost / Estimated useful life
7. Computer equipment was acquired at the beginning of the year at a cost of $57,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years. Determine the second-year depreciation using the straight-line method.
a.$13,200
b.$9,000
c.$19,200
d.$9,600
8. Which of the following is true?
A. If using the double-declining-balance method, the total amount of depreciation expense during the life of the asset will be the highest.
B. Regardless of the depreciation method, the amount of total depreciation expense during the life of the asset will be the same.
C. If using the units-of-output method, it is possible to depreciate more than the depreciable cost.
D. If using the straight-line method, the amount of depreciation expense during the first year is higher than that of the double-declining-balance.
9. When a company discards machinery that is fully depreciated, this transaction would be recorded with the following entry
A. debit Accumulated Depreciation; credit Machinery
B .debit Machinery; credit Accumulated Depreciation
C. debit Depreciation Expense; credit Accumulated Depreciation
D. debit Cash; credit Accumulated Depreciation
10. On December 31, Strike Company sold one of its batting cages for $50,000. The equipment had an original cost of $310,000 and has accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. What is the amount of the gain or loss on this transaction?
a.loss of $50,000
b.no gain or loss
c.cannot be determined
d.gain of $50,000
11. The natural resources of some companies include
A. timber, equipment, and patents
B. metal ores, copyrights, and supplies
C. timber, metal ores, and minerals
D. minerals, trademarks, and land
12. Copy equipment was acquired at the beginning of the year at a cost of $38,870 that has an estimated residual value of $3,500 and an estimated useful life of 5 years. It is estimated that the machine will output an estimated 1,179,000 copies. This year, 298,000 copies were made.
a. Determine the depreciable cost. $________
b. Determine the depreciation rate. $ _____ per copy
c. Determine the units-of-output depreciation for the year. $ ________