1 The reason depreciation is recorded on a plant asset is to Question 1 options A) Set up a cash fund to replace the asset when it wears out B) Pay off the liabilities incurred when we purchased the asset C) Allocate the cost of the asset to expense in periods that benefit from its use 3 Crosby Construction negotiates a lump sum purchase of several assets from a company that is going out of business The purchase is completed on January 1, 2016, at a total cash price of $400,000 for a building, land, and land improvements The estimated market (appraisal) values of the assets are Building $325,000 Land $100,000 Land Improvements $ 75,000 Total $500,000 How is the $400,00 purchase price allocated Question 3 options A) Building $225,000 Land $100,000 Land improvements $75,000 B) Building $325,000 Land $100,000 Land improvements $75,000 C) Building $325,000 Land $75,000 Land improvements $0 D) Building $325,000 Land $0 Land improvements $75,000 E) Building $260,000 Land $ 80,000 Land improvements $ 60,000 3 On January 1, 2016, Stills Co bought a car for $48,000 The car had a 5 year useful life and $8,000 salvage value Stills uses the straight line depreciation method What is the depreciation expense reported for this car on the December 31, 2016 income statement (The asset was used for a full year in 2016) Your Answer 4 On April 1, 2016, Nash Co bought a building for $460,000 The building had a 10 year useful life and $60,000 salvage value Nash uses the straight line depreciation method What is the depreciation expense reported for this building on the December 31, 2016 income statement (The asset was used for less than 12 months in 2016) Your Answer

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1. The reason depreciation is recorded on a plant asset is to: Question 1 options: A) Set up a cash fund to replace the asset

1. The reason depreciation is recorded on a plant asset is to:

Question 1 options:

A)	Set up a cash fund to replace the asset when it wears out.

B)	Pay off the liabilities incurred when we purchased the asset.

C)	Allocate the cost of the asset to expense in periods that benefit from its use.

3. Crosby Construction negotiates a lump-sum purchase of several assets from a company that is going out of business. The purchase is completed on January 1, 2016, at a total cash price of $400,000 for a building, land, and land improvements. The estimated market (appraisal) values of the assets are:

Building	$325,000
Land	$100,000
Land Improvements	$ 75,000

Total $500,000

How is the $400,00 purchase price allocated?

Question 3 options:

A)	Building $225,000 Land $100,000 Land improvements $75,000

B)	Building $325,000 Land $100,000 Land improvements $75,000

C)	Building $325,000 Land $75,000 Land improvements $0

D)	Building $325,000 Land $0 Land improvements $75,000

E) Building $260,000

Land $ 80,000

Land improvements $ 60,000

3. On January 1, 2016, Stills Co. bought a car for $48,000. The car had a 5-year useful life and $8,000 salvage value. Stills uses the straight-line depreciation method. What is the depreciation expense reported for this car on the December 31, 2016 income statement? (The asset was used for a full year in 2016).

Your Answer:

4. On April 1, 2016, Nash Co. bought a building for $460,000. The building had a 10-year useful life and $60,000 salvage value. Nash uses the straight-line depreciation method. What is the depreciation expense reported for this building on the December 31, 2016 income statement? (The asset was used for less than 12 months in 2016).

Your Answer: