“ In the juture) 1. A tangible asset is recorded at the: A. cost of the asset on

Question

“ In the juture) 1. A tangible asset is recorded at the: A. cost of the asset only. B. cost of the asset, but it is subsequently adjusted up or down to its market value. C. appraised value. D. cost of the asset plus all costs necessary to get the asset ready for its intended use. 2. A company acquired property that included land, building, and equipment for a total cost of $100,000. The land was appraised at $45,000, the building at $62,000, and the equipment at $18,000 for a total appraised value of $125,000. What is the amount of the cost to be allocated to the building in the accounting records? A. $O B. $100,000 C. $62,000 D. $49,600 E. $125,000 3. Which of the following statements regarding depreciation is true? A. Depreciation allocates the cost of the asset to the periods in which it generates revenue. B. The purpose C. Deprec increase D. The entry to record depreciation includes a debit to a contra account. of depreciating a long-lived asset is to record the decline in the asset's market value over time. iating an asset increases accumulated depreciation which causes the book value of the asset to asset account and a credit to an expense 4. Accumulated depreciation is classified as a(n): A. expense account. B. liability account. C. contra-asset account. D. stockholders' equity account E. contra-expense account

Explanation / Answer

1 Tangible asset is recorded at cost of the asset plus all costs necessary to get the asset ready for its intended use. 2 Cost to be allocated to building = (100000/125000*62000)= 49600 3 Depreciation allocates the cost of the asset to the periods in which it generates revenue 4 Accumulated depreciation is a contra-asset account

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