21. Depreciation is a process of A) asset devaluation. B) asset valuation. C) cost accumulation. D) cost allocation. 22. If a plant asset is retired and is fully depreciated A) a gain on disposal will be recorded. B) a loss on disposal will be recorded. C) no gain or loss on disposal will be recorded. D) phantom depreciation must be taken as though the asset were sill on the books 23. Research and development costs should be included in the cost of the patent they relate to. A) B) are capitalized and then amortized over a period not to exceed 20 years C) are classified as intangible assets. D) must be expensed when incurred under generally accepted accounting principles 24. Kathy's Blooms purchased a delivery van with a $60,000 list price. The company was given a $6,000 cash discount by the dealer, and paid $3,000 sales tax. Annual insurance on the van is S1,500. As a result of the purchase, by how much will Kathy's Blooms increase its van account? A) $54,000. B) $58,500. C) $60,000. D) $57,000. 25. Equipment was purchased for $85,000 on January 1, 2016. Freight charges amounted to $3,500 and there was a cost of $10,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $15,000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2017, if the straight-line method of depreciation is used? A) $33,400. B) $16,700. C) $14,300. D) $28,600. Page 5 Version 2