Question 1 Accumulated Depreciation Question 1 options: is used to show the amou

Question

Question 1

Accumulated Depreciation

Question 1 options:

is used to show the amount of cost expiration of intangibles

is the same as Depreciation Expense

is a contra asset account

is used to show the amount of cost expiration of natural resources

Question 2

A characteristic of a fixed asset is that it is

Question 2 options:

intangible

used in the operations of a business

held for sale in the ordinary course of the business

a short-term investment

Question 3

A used machine with a purchase price of $77,000, requiring an overhaul costing $8,000, installation costs of $5,000, and special acquisition fees of $3,000, would have a cost basis of

Question 3 options:

$93,000

$90,000

$82,000

$85,000

Question 4

An asset was purchased for $120,000 on January 1, Year 1, and originally estimated to have a useful life of 10 years with a residual value of $10,000.  At the beginning of the third year, it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,000.  Calculate the third-year depreciation expense using the revised amounts and straight-line method.

Question 4 options:

$25,000

$11,000

$24,000

$24,500

Question 5

On June 1, 2015, Aaron Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years and 30,000 hours. Aaron company uses straight line depreciation for the equipment and operates on a calendar year basis (fiscal year = calendar year).

Calculate the gain or loss if the equipment is sold for $35,000 on January 31, 2018.

Question 5 options:

$15,000 gain

$5,000 gain

$15,000 loss

$5,000 loss

Question 6

If a fixed asset, such as a computer, was purchased on January 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for the monthly expense under straight-line depreciation is

Question 6 options:

Depreciation Expense                               100

             Accumulated Depreciation 100

Depreciation Expense                             1,200

             Accumulated Depreciation                            1,200

Accumulated Depreciation                      1,200

              Depreciation Expense                                   1,200

Accumulated Depreciation 100

             Depreciation Expense                                     100

is used to show the amount of cost expiration of intangibles

is the same as Depreciation Expense

is a contra asset account

is used to show the amount of cost expiration of natural resources

Explanation / Answer

1) Accumulated Depreciation is same as Depreciation Expense

2) A characteristic of a fixed asset is that it is used in the operations of a business.

3) Cost of the machinery

Overhaul expense is expense which is used to repair and maintain machinery which reduces the operating cost so it should be capitalised.

4)

24000

  

Purchase price 77000 Installation cost 5000 Special acquistion fees 3000 Overhaul expense 8000 Cost of the machine 93000

Overhaul expense is expense which is used to repair and maintain machinery which reduces the operating cost so it should be capitalised.

4)

Cost of the asset 120000 Useful life 10 years Salvage value 10000 Depreciation 11000 Depreciation for 1st year 11000 Depreciation for 2nd year 11000 Book value at the beginning of 3rd year 98000 Revised remaining years 4 years Revised residual value 2000 Revised depreciation amount

24000

  

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