9. If a plant asset is retired before it is fully depreciated and no (S0) salvag
ID: 2594456 • Letter: 9
Question
9. If a plant asset is retired before it is fully depreciated and no (S0) salvage value (S/V) is received, A) a gain on disposal occurs. B) a loss on disposal occurs. C) either a gain or a loss can occur D) neither a gain nor a loss occurs. 10. A company sells a plant asset which originally Cost $210,000 for $70,000 Cash on December 31, 2011. The Accumulated Depreciation (A/D) account had a balance of $84,000 after the current year's depreciation of $21,000 had been recorded. The company should recognize a A) S140,000 loss on disposal. B) $56,000 gain on disposal. C) $56,000 loss on disposal. D) $35,000 loss on disposal. 11. A truck that cost $21,000 and on which $10,000 of Accumulated Depreciation (A/D) has been recorded was disposed of or sold for $9,000 Cash. The entry to record this event would include a A) gain of $2,000. B) loss of $2,000. C) credit to the Truck account for $11,000. D) credit to Accumulated Depreciation for $10,000. 12. A company sells a plant asset which originally cost $360,000 for $120,000 Cash on December 31, 2015. The Accumulated Depreciation (A/D) account had a balance of S144,000 after the current year's depreciation of $36,000 had been recorded. The company should recognize a A) S240,000 loss on disposal. B) $96,000 gain on disposal. C) $96,000 loss on disposal. D) $60,000 loss on disposal. The interest charged on a Si 00,000 note payable, at the annual rate of 8%, on a 90-day note would be A) $8,000. B) $4,444 C) $2,000. D) $667. 13·Explanation / Answer
9.
If a plant asset is retired before it is fully depreciated, then Cost is greater than the Accumulated depreciation. As no salvage value is received, the retairment results in loss on disposal.
The answer is B.
10.
Book value = Cost - Accumulated depreciation
= 210,000 - 84,000
= 126,000
Loss on sale = Book value - Sale value
= 126,000 - 70,000
= 56,000
The answer is C.
11.
Book value = Cost - Accumulated depreciation
= 21,000 - 10,000
= 11,000
Loss on sale = Book value - Sale value
= 11,000 - 9,000
= 2,000
The answer is B.
12.
Book value = Cost - Accumulated depreciation
= 360,000 - 144,000
= 216,000
Loss on sale = Book value - Sale value
= 216,000 - 120,000
= 96,000
The answer is C.
13.
Interest = 100,000 * 8% * 90/360 = 2,000
The answer is C.
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