7-7 Anniston Company purchased equipment and incurred the following costs: What is the cost of the equipment? a. $68,500 c. $72,250 b. $71,925 d. $72,650 7-2 The cost principle requires that companies record fixed assets at: a. fair value. c. historical cost. b. book value. d. market value. 7-3 When depreciation is recorded each period, what account is debited? a. Depreciation Expense c. Accumulated Depreciation - b. Cashi d. The fixed asset account involved Use the following information for Multiple-Chotce Questions 7-4 through 7-6: Cox Inc. acquired a machine for $800,000 on January 1, 2013. The machine has a salvage value of $20,000 and a 5-year useful life. Cox expects the machine to run fof $5,000 machine hours. The machine was actually used for 4,200 hours in 2013 and 3,450 hours in 2014 . The machine was actually usod for 4,200 hours in 2013 and 3,450 hours in 2014 . 7-4Refor to the information for Cox Inc. above. What would be the balance in the accumulated depreciation account at December 31, 2014, if the straight-line method were used? a. $156,000 c. $312,000 b. $160,000 d. $328,000 7-11 rabek Inc, decided to sell one of its fixed assets that had a cost of $55,000 and accumulated depreciation of $35,000 on July 1, 2013. On that date, Jerabek sold the fixed asset for $15,000. What was the resulting gain or loss from the sale of the asset? a. $5,000 loss c. $15,000 loss b. $5,000 gain d. $15,000 gain 7-12 Which of the following statements is true? a. The fixed asset turnover ratio assists managers in determining tho estimated future capital expenditures that are needed. b. The average age of the fixed assets is computed by dividing accumulated depreciation by depreciation expense. c. If net sales increases, the fixed asset turnover ratio will decrease. d. A relatively low fixed asset turnover ratio signals that a company is efficiently using its assets. 7-13 W hich of the following is not an intangible asset? a. Patent . c. Research and development 0 b. Trademark d. Goodwill 7-14 Heston Company acquired a patent on January 1, 2013, for $75,000. The patent has a remaining legal life of 15 years, but Heston expects to receive benefits from the patent for only 5 years. What amount of amortization expense does Heston record in 2013 related to the patent? a. $5,000 c. $15,000 b. $7,500 d. SO - patents are not amortized. Use the following information for Comerstone Exercises 7-19 through 7-21: Irons Delivery Inc. purchased a new delivery truck for $45,000 on January 1,2013 . The truck is expected to have a $3,000 residual value at the end of its 5-year useful life. Cornerstone Exercis ( -19 Straight-Line Depreciation Refer to the information for Irons Delivery Inc. above. Irons uses the straight-line method of depreciation. Required: Prepare the journal entry to record depreciation expense for 2013 and 2014. Cornerstone Exercise 7-20 Declining Balance Depreciation Refer to the information for Irons Delivery Inc. above. Irons uses the double-declining-balance method of depreciation. Required: Prepare the journal entry to record depreciation expense for 2013 and 2014. Cornerstone Exercis (7-26 Amortization of Intangible Assets MicroSystems Inc. acquired a patent for $180,000. MicroSystems amortizes the patent on a straight-line basis over its remaining economic life of 12 years. Required: Prepare the journal entry to record the amortization expense related to the patent