6. The Megallit Film Studio owns a production lot and related equipment. How wou

Question

6. The Megallit Film Studio owns a production lot and related equipment. How would Megalfit Company categorize these assets? A. Tangible assets B. Natural resources C. Intangible assets D. Goodwill 7. Which of the following statements about capitalizing costs is correct? A. Capitalizing costs refers to the process of converting assets to expenses B. All costs incurred to acquire an asset may be capitalized. C. Capitalizing a cost means to record it as an asset. D. Capitalizing costs results in an immediate decrease in net income 8. On January 1, Baker Co. purchased equipment for $100,000. It has an estimated useful life of five years and its residual value is $10,000. The company has a calendar year-end. Using the straight-line method, depreciation expense for the first year of its life equals: A. $18,000. B. S20,000. C. S36,000. D. $40,000. 9. On January 1, Charlie Co. purchased a truck for $50,000 which has an estimated productive life of 100,000 miles. Its residual value is $5,000. During the first full year of its useful life, the company drove the truck 25,000 miles. Its depreciation expense for the year using the units of production method is: A. $ 9,000. B. S10,000. C. $11,250 D. $12,500. 10. A company buys a piece of equipment for $48,000. The equipment has a useful life of ten years. No residual value is expected at the end of the uscful life. Using the double-declining-balance method, what is the expense in the first year of the equipment's useful life? A. $9,600 B. $12,000 C. $4,800 D. S24,000

Explanation / Answer

6. A. Tangible asset

7. C. Capitalizing a cost means to record it as an asset.

8. A. $18000

9.Ans C $11250

10.Ans A 9600

Depreciation expense = (Cost - Accumulated depreciation) × (2 ÷ Useful life) (100000-10000)/5 18000

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