E8-4- Instructions Identify each statement as true or false. If false, indicate how to correct the statement. Alysha Monet has prepared the following list of statements about depreciation. 1. Depreciation is a process of asset valuation, not cost allocation. 2. Depreciation provides for the proper matching of expenses with revenues. 3. The book value of a plant asset should approximate its fair value. 4. Depreciation applies to three classes of plant assets: land, buildings and equipment 5. Depreciation does not apply to a building because its usefulness and revenue-producing ability generally remain intact over time. 6. The revenue-producing ability of a depreciable asset will decline due to wear and tear and to obsolescence. 7. Recognizing depreciation on an asset results in an accumulation of cash for replacement of the asset. 8. The balance in accumulated depreciation represents the total cost that has been charged to expense since placing the asset in service 9 Depreciation expense and accumulated depreciation are reported on the income statement- 10. Three factors affect the computation of depreciation cost, useful life, and salvage value. Page 2 of 3 Page E8-7 Thieu Co has delivery equipment that cost $50,000 and has been depreciated $24,000.- How would you record the disposal under the following assumptions? Instructions: Record disposal of pquipment (a)lt was scrapped as having no value. Assets = Liabilities Stockholders' Equity (b)lt was sold for $37.000.- Assets Liabilities + Stockholders' Equity (c)It was sold for $20,000.- Assets Liabilities + Stockholders' Equity E8.9 The following is a tabular summary relating to equipment that was purchased for cash by a company on the first day of the current year. The equipment was depreciated on a straight-line basis with an estimated useful life of 10 years and a salvage value of S100 Part of the equipment was sold on the last day of the current year for cash proceeds. Liabilities Stockholders' Equity Retained Earnings Cash- + Equipment AD. Equip Common Stock Rev. Exp. Div. Jan 1 (a) $1,100 Dec 31 -$100 (b) Dec. 31 +S450 -440- +40 Ich Instructions Use the information in the tabular summary to derive the missing amounts: a) Purchase of equipment on January 1. What was the cash paid? b) Depreciation recorded on December 31. What was the depreciation expense? c) Sale of part of the equipment on December 31. What was the gain on disposal