1. Depreciation expense is calculated using estimates of an asset's salvage value and useful life.
a.True
b. False
2. Land improvements are:
a. Assets that increase the usefulness of land, and like land, are not depreciated
b. Assets that increase the usefulness of land, but that have a limited useful life and are subject to depreciation
c. Included in the cost of the land account
d. Expensed in the period incurred
e. Also called basket purchases
3. Classify the below transactions as either revenue or capital expenditures
a. Paid $40,000 cash to replace a compressor on a refrigeration system that extends its useful life by four years.
b. Paid $200 cash per truck for the cost of their annual tune-ups.
c. Paid $175 for the monthly cost of replacement filters on an air-conditioning system
d. Completed an addition to an office building for $225,000 cash