Question

1 Approved Answer

Posted on Jun 22, 2024

1 The cost principle requires that an asset be recorded at the cash or cash equivalent amount given in exchange. true or false 2 A

1 The cost principle requires that an asset be recorded at the cash or cash equivalent amount given in exchange. true or false

2 A machine originally had an estimated service life of 5 years, and after 3 years, it was decided that the original estimate should have been for 10 years. The remaining cost to be depreciated should be allocated over the next

Multiple Choice

2 years
10 years
6 years
5 years
7 years

3 Land purchased as a building site is a tangible asset called property, plant and equipment and is classified under the "Long-term Investments" section on the balance sheet. true or false

4 Sports Med sold an X-ray machine that originally cost $100,000 for $60,000. The accumulated depreciation on the machine to the date of sale was $40,000. On this sale, Sports Med should recognize:

Multiple Choice

$0 gain or loss
$40,000 loss
$20,000 gain
$25,000 gain
$60,000 gain

5 Non-current assets are any liabilities that are used in the operations of a business. true or false

6 On October 1 of this year, SportsWorld purchased a delivery van for $23,000 with a residual value of $3,000. The van has an estimated useful life of 5 years. Using straight-line depreciation and the half-year rule, how much depreciation expense should SportsWorld recognize on December 31 of this year?

Multiple Choice

$1,465
$1,333
$1,000
$4,600
$2,000

7 Creek Construction purchased a machine for $26,000. It traded in an old machine and received a $4,200 trade-in allowance. The old machine cost $24,000 and had accumulated depreciation of $16,000 to the date of trade-in. At what value should be new asset be recorded?

Multiple Choice

$21,800
$29,800
$24,000
$26,000
$30,200

8 Residual value is an estimate of an asset's value at the end of its useful life. true or false

9 SportsWorld uses straight-line depreciation for a piece of equipment that cost $12,000, had a trade-in value of $2,000, and a five-year service life. At the end of the third year, the trade-in value was revised to $1,200 and the useful life increased to a total of 6 years. Calculate the amount of depreciation expense for each of the remaining years of the asset's useful life.

Multiple Choice

$1,800
$1,600
$1,467
$2,160
$1,000

10 Revenue expenditures are additional costs of property, plant and equipment that provide material benefits extending beyond the current period. true or false

11 Capital expenditures are also called balance sheet expenditures. true or false

12 Because land has unlimited life, it is not subject to depreciation. Therefore, items that increase the usefulness of the land such as parking lots are also not depreciated. true or false

13 SportsWorld discarded a display case it had purchased for $8,000. $7,200 in accumulated depreciation had been recorded to the date of sale. SportsWorld should recognize a gain or loss on disposal of

Multiple Choice

$8,000 loss
$0
$800 loss
$800 gain
$7,200 loss

14 The purchase of real estate that includes land, building, and land improvements is called a lump-sum purchase. true or false

15 Creek Construction owned a bulldozer which was destroyed by fire. The bulldozer originally cost $38,000. The accumulated depreciation recorded to the date of loss was $20,000. The proceeds from the insurance company were $20,000. Creek Construction should recognize

Multiple Choice

An expense of $2,000
A gain of $20,000
A gain of $2,000
A loss of $38,000
A loss of $2,000

16 JoyCo acquired equipment on April 1, 2022, at a cost of $90,000 and with an estimated useful life of 10 years. The machine has a residual value of $10,000. JoyCo uses the double-declining-balance method of depreciation. How much depreciation should be recorded by JoyCo for the year ended December 31, 2022?

Multiple Choice

$12,000
$10,000
$8,000
$9,000
$13,500

17 If a machine is damaged during unpacking, the repairs are added to its cost. true or false

18 SportsWorld purchased property for a building site. The costs associated with the property were:

Purchase Price$175,000Real Estate Commissions$15,000Legal Fees$800Expense of clearing land$2,000Expense to remove old building$1,000

What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?

Multiple Choice

$190,800 to Land; $3,000 to Building
$192,800 to Land; $1,000 to Building
$150,000 to Land; $18,800 to Building
$190,000 to Land; $3,800 to Building
$193,800 to Land; $0 to Building

19 SportsWorld purchased equipment costing $10,000. The equipment has a residual value of $1,000, and an estimated useful life of 5 years or 36,000 shoes. Actual units produced during the year were 7,000 units. Calculate annual depreciation using the straight line method.

Multiple Choice