1. A company buys equipment on January 1, Year One, for $300,000 that should help generate revenues for 10 years and then be worthless. On December 31, Year Three, the company sold the equipment for $220,000 and correctly recorded all entries. On its Year Three financial statements, the company will report Depreciation Expense on its income statement but not Accumulated Depreciation on its balance sheet. True or False

2. The cost of an asset as well as its accumulated depreciation is removed when an asset is sold. True or False

3. On January 1, 2017, Atlantic Company purchased a new warehouse for $840,000 with a salvage value of $40,000 and an estimated useful life of 40 years. Atlantic has chosen to use the double-declining balance method of depreciation. The journal entry to record the depreciation expense of 2018 would include:

Question 3 options:

	a. a debit to Depreciation Expense for $42,000.
	b. a debit to Depreciation Expense for $39,900.
	c. a credit to Accumulated Depreciation for $42,000.
	d. a debit to Accumulated Depreciation for $39,900.
	e. a credit to Accumulated Depreciation for $21,900

4. When an asset is sold, depreciation must be recorded for the period since the last preparation of financial statements. True or False