If a fixed asset with an original cost of $18,000 and accumulated depreciation of $12,000 is sold for $15,000, the company mus
xoonSET# 1
1. If a fixed asset with an original cost of $18,000 and accumulated depreciation of $12,000 is sold for $15,000, the company must (Points : 2)
recognize a loss on the income statement under other expenses.
recognize a loss on the income statement under operating expenses.
recognize a gain on the income statement under other revenues.
Gains and losses are not to be recognized upon the sell of fixed assets.
2. If a fixed asset is sold and the book value is less than cash received, the company must (Points : 2)
recognize a loss on the income statement under other expenses.
recognize a loss on the income statement under operating expenses.
recognize a gain on the income statement under other revenues.
Gains and losses are not to be recognized upon the sell of fixed assets.
3. Depreciable cost equals (Points : 2)
cost less accumulated depreciation.
book value less residual value.
cost less residual value.
market value less residual value.
4. Goodwill is (Points : 2)
amortized similar to other intangibles.
only written down if an impairment in value occurs.
charged to expense immediately.
amortized over 40 years or its economic life, whichever is shorter.
5. Expenditures that add to the utility of fixed assets for more than one accounting period are (Points : 2)
committed expenditures.
revenue expenditures.
current expenditures.
capital expenditures.
6. A company purchased an oil well for $25 million with a residual value of $500,000. It is estimated that 10 million barrels can be extracted from the well. Determine depletion expense assuming 3 million barrels are extracted and sold. (Points : 2)
$7,350,000
$7,500,000
$5,000,000
$7,650,000
7. Book value is defined as (Points : 2)
current market value less residual value.
cost less residual value.
current market value less accumulated depreciation.
cost less accumulated depreciation.
8. Which of the following expenditures would NOT be included in the cost of an asset? (Points : 2)
Freight costs
Vandalism
Sales tax
Surveying fees
9. To measure depreciation, all of the following must be known EXCEPT (Points : 2)
market value.
residual value.
historical cost.
estimated life.
10. A capital expenditure would appear on the (Points : 2)
income statement under operating expenses.
balance sheet under fixed assets.
balance sheet under current assets.
income statement under other expen
SET#2
income statement under operating expenses. |
residual value. |
current operating expenses. |
Freight costs |
amortized similar to other intangibles. |
at current market values. |
committed expenditures. |
$7,350,000 |
$93,500 |
expenses are overstated and owners' equity is understated. |
- 10 years ago
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