1.As a company records depreciation expense for a period of time, cash is accumulated to replace fixed assets as they wear out.

True/False

4.An asset was purchased for $110,000.00 on January 1, Year 1 and originally estimated to have a useful life of 11 years with a residual value of $9,000.00. At the beginning of the third year, it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,600.00. Calculate the third-year depreciation expense using the revised amounts and straight line method.

Select the correct answer.

$22,759.09

$21,259.09

$22,259.09

$23,259.09

5. Costs associated with normal research and development activities should be treated as intangible assets.

True/False

7. The amount of the depreciation expense for the second full year of use of a fixed asset costing $100,000, with an estimated residual value of $5,000 and a useful life of 4 years, is $25,000 by the double-declining-balance method.

True/False

9. The amount of depreciation expense for the first full year of use of a fixed asset costing $95,000, with an estimated residual value of $5,000 and a useful life of 5 years, is $19,000 by the straight-line method.

True/False

12. The accumulated depletion of a natural resource is reported on the:

a. balance sheet as a deduction from the cost of the resource

b. income statement as a deduction from revenues

c. balance sheet as depreciation from the cost of the resource

d. income statement as an increase in revenue

15. An exchange is said to have commercial substance if future cash flows remain the same as a result of the exchange.

True/False

18 Equipment with a cost of $220,000 has an estimated residual value of $30,000 and an estimated life of 10 years or 19,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 2,100 hours?

$19,000

$22,000

$30,000

$21,000

30. When exchanging equipment, if the trade-in allowance is greater than the book value a loss results.

True/False

38. Once the useful life of a depreciable asset has been estimated and the amount to be depreciated each year has been determined, the amounts cannot be changed.

True/False