1. Which of the following is considered physical depreciation of a fixed asset?

a.A change in customer needs

b.A decline in the market value of the asset

c.Obsolescence due to technology

d.Normal wear and tear

2. Which of the following statements regarding discarding fixed assets is not true?

a.Recorded depreciation should be brought up to date before removing the asset from the accounting records.

b.If a fixed asset is no longer used and has no residual value, it is discarded.

c.If a fixed asset is no longer used and has no residual value, it should be written off.

d.Full depreciation should be recorded and no loss recognized with an asset that is discarded rather than sold.

3. All of the following are considered repairs or improvements to fixed assets except

a.asset improvements.

b.ordinary maintenance and repairs.

c.extraordinary repairs.

d.necessary maintenance costs.

4. Equipment was purchased at a cost of $38,000. It had an estimated useful life of 8 years and a residual value of $6,000. Assuming the equipment was sold at the end of Year 6 for $9,000, determine the gain or loss on the sale of the equipment. (Assume the straight-line depreciation method.)

a.A loss of $5,000

b.A loss of $9,000

c.A gain of $5,000

d.A gain of $9,000