BALANCE SHEET ACCOUNTS-12/31/Year 5 Equipment Accumulated depreciation Book value Mounts reported on the $ 400,000 (150,000) $250,000 $ (50,000) INCOME STATEMENT ACCOUNTS-Year 5 Depreciation expense Gain on sale of equipment Loss on sale of land 7,000 (3,000) Refer to the financial statement information presented above to answer the following questions. Q1 The amount originally paid (acquisition cost) to purchase the equipment was $ was capitalized and recorded as a(n) (noncurrent asset / expense). Q2 The portion of the equipment's original cost expensed since it was purchased is $ cost allocated to Year 5 for use of the equipment is $ depreciation is used, it appears the equipment was purchased which The Assuming straight-line years ago. 03 Depreciation expense is a(n) (estimated / known) amount recorded (at the end of / during) each accounting period as an adjustment, which is an application of the (cost/matching/consistency) principle. On a multi-step income statement, depreciation expense is reported as an (operating expense/nonoperating revenues and expenses). 04 The (straight-line / double-declining-balance / neither) method(s) of depreciation will result in greater depreciation the first year of an asset's useful life and the (straight-line/double-declining- balance / neither) method(s) will result in greater total depreciation over the asset's useful life. Book value (is/ is not) the same as current value. The primary purpose of depreciation is (cost allocation / current valuation). Explain what this means. 05 more than (acquisition cost/ book value / less than (acquisition cost/market value). Q6 During the year, equipment was sold for $ market value) whereas land was sold for $ The company got a better deal on the sale of the (equipment /land/ can't tell). Explain. Q7 As a result of the financial statement information above, $ assets and Year 5 net income will (increase/decrease) by $ will be added into total Q8 By purchasing additional property, plant, and equipment, the company is investing in (short-term/ long-term) income-producing assets that are expected to (increase/decrease) future revenues