1. To measure depreciation, all of the following must be known EXCEPT (Points : 2)

market value. residual value. historical cost. estimated life.

2. 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.

3. A fully depreciated asset must be (Points : 2)

removed from the books. kept on the books until sold or discarded. disclosed only in the notes to the financial statements. recognized on the income statement as a loss.

4. The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called (Points : 2)

depletion. deferral. amortization. depreciation.

5. Which of the following expenditures would NOT be included in the cost of an asset? (Points : 2)

Freight costs Vandalism Sales tax Surveying fees

6. Which of the following is NOT an intangible asset? (Points : 2)

Goodwill Trademark Copyrights Long-term receivable

7. Salvage value has a similar meaning as (Points : 2)

residual value. scrap value. book value. both residual value and scrap value.

8. 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.

9. If a revenue expenditure is treated as a capital expenditure, then (Points : 2)

expenses are overstated and owners' equity is understated. expenses are overstated and assets are overstated. expenses are understated and owners' equity is overstated. net income is overstated and owners' equity is understated.

10. A company acquired some land for $80,000 to construct a new office complex. Legal fees paid were $2,300, delinquent taxes assumed were $3,400, and $5,850 was paid to remove an old building from which salvaged materials sold for $1,950. What is the cost basis for the land? (Points : 2)

$93,500 $91,550 $85,700 $89,600