1.

The cost of permits and licenses are material to the entity for whom you are accounting. The cost of these items should be:

capitalized but not amortized.

charged against paid-in capital.

expensed over the useful life of the items.

expensed in the period acquired.

A machine was purchased for $8,000,000 on January 1, 2014. It has an estimated useful life of 8 years and a residual value of $800,000. Depreciation is being computed using the sum-of-the-years-digits method. What amount should be shown for this machine, net of accumulated depreciation, in the companys December 31, 2015 balance sheet?

$6,300,000

$4,200,000

$6,600,000

$5,000,000

A machine is purchased by the Dunnagin Company for $18,000. Dunnagin pays $6,000 in cash and gives a note payable for $12,000 that is payable in installments over a four-year period. Dunnagin estimates that the machine could physically last for 12 years, even though Dunnagin expects to use it in its business for only 9 years. The period of time to be used by Dunnagin for depreciation purposes is:

4 years.

9 years.

5 years.

12 years.

A van has an original cost of $42,000 and accumulated depreciation of $11,000. It is sold for $27,000 cash. The journal entry to record the sale will include a:

credit to Vans for $27,000.

debit to Loss on Disposal of Plant Assets for $4,000

credit to Gain on Disposal of Plant Assets for $4,000.

debit to Loss on Disposal of Plant Assets for $15,000