Question 1

A gain on disposal of an asset is listed as:

Accepted Answer

Gains on the disposal of an asset are recorded as other income on the income statement, reflecting the positive difference between the sale price and the book value of the asset sold.

Question 2

Accumulated depreciation is a contra ________ and is reported on the ________.

Accepted Answer

The answer of Accumulated depreciation is a contra ________ and...

Question 3

The journal entry to record a loss when selling a plant asset would include:

Accepted Answer

When a plant asset is sold at a loss, the loss is recorded by debiting the "Loss on Sale of Plant Asset" account to reflect the financial impact of the sale.

Question 4

Assume an asset costing $90,000 is expected to produce 400,000 units and have a salvage value of $2,000. During year 1, 75,000 units were produced; during year 2, 68,000 units were produced; and during year 3, 70,000 units were produced. Using units-of-production, compute the depreciation expense for each of the three years.

Accepted Answer

The answer of Assume an asset costing $90,000 is expected...

Question 5

A loss on the sale of a plant asset is listed as:

Accepted Answer

A loss on the sale of a plant asset is recorded as an "other expense" on the income statement because it represents an outflow or the consumption of economic benefits during the period.

Question 6

Revenue expenditures do NOT include:

Accepted Answer

Additions to existing plant assets are considered capital expenditures, not revenue expenditures, because they are intended to improve or extend the life of the asset, rather than just maintain it.

Question 7

Budgeting for items such as equipment and furniture would be considered:

Accepted Answer

Capital expenditures refer to funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, technology, or equipment. Budgeting for items such as equipment and furniture falls under this category because these are long-term investments in the business.

Question 8

When equipment that is fully depreciated is discarded:

Accepted Answer

When fully depreciated equipment is discarded, Accumulated Depreciation is debited to remove the depreciation recorded, and Equipment is credited to remove the asset from the books.

Question 9

A company installed a new engine in their delivery vehicle. This is an example of a(n):

Accepted Answer

The answer of A company installed a new engine in...

Question 10

A loss on the sale of an asset would occur when:

Accepted Answer

A loss on the sale of an asset occurs when the cash received from the sale is less than the book value of the asset, meaning the asset is sold for less than its recorded value on the books.

Question 11

A piece of equipment is purchased for $78,000 on January 1. It has a 5-year life and a salvage value of $8,000. Compute the annual depreciation expense using the double declining-balance method for all 5 years.

Accepted Answer

The answer of A piece of equipment is purchased for...

Question 12

Bobson Company purchased a $60,000 machine on January 1. The machine is expected to have a useful life of 10 years or 60,000 operating hours and a residual value of $5,000. The machine was used for 6,000 hours in the first year and 4,400 hours in the second year. Compute the amount of depreciation expense for the first and second years under each of the methods below.

Accepted Answer

The answer of Bobson Company purchased a $60,000 machine on...

Question 13

What is the difference between an extraordinary repair and a betterment?

Accepted Answer

The answer of What is the difference between an extraordinary...

Question 14

A gain on the sale of an asset occurs when:

Accepted Answer

A gain on the sale of an asset occurs when the cash received from the sale exceeds the book value of the asset at the time of the sale. The book value is calculated as the original cost of the asset minus any accumulated depreciation.

Question 15

Capital expenditures would include:

Accepted Answer

Capital expenditures include additions, betterments, and extraordinary repairs, as they are costs incurred to acquire or improve a fixed asset, thereby increasing its value or extending its useful life.

Question 16

A company incorrectly records revenue expenditures as capital expenditures on its books. As a result, which of the following will be true?

Accepted Answer

When a company incorrectly records revenue expenditures as capital expenditures, it capitalizes costs that should have been expensed immediately. This results in lower expenses in the current period, leading to an overstatement of net income for the year.

Question 17

A car is purchased for $30,000 on January 1. It has a 5-year life and a salvage value of $2,000. Compute the annual depreciation expense using the double declining-balance method for all 4 years.

Accepted Answer

The answer of A car is purchased for $30,000 on...

Question 18

A company purchased a new delivery van on January 1, 2012 for $25,000. The company expects to use the van for 5 years and then sell it for $5,000. Complete the following depreciation table assuming straight-line depreciation:

Accepted Answer

The answer of A company purchased a new delivery van...

Question 19

The entry to record the payment of an extraordinary repair of $5,000 that will extend the life of the machine 5 years, when the machine cost $32,000, and has accumulated depreciation of $28,000, is to:

Accepted Answer

The answer of The entry to record the payment of...

Question 20

Tender Years purchased a new van on January 1, 201X, for $60,000. The life of the van is 5 years or 100,000 miles, with an estimated residual value of $5,000. During the first year, the van was driven 22,000 miles. Compute the depreciation expense for the first year applying each of the methods below.
a) ________ Straight-line
b) ________ Units-of-production
c) ________ Double declining-balance

Accepted Answer

The answer of Tender Years purchased a new van on...

Quiz 16: Accounting for Property, Plant, Equipment, and Intangible Assets