Question 1

Accumulated Depreciation

Question 1 options:

	is used to show the amount of cost expiration of intangibles
	is the same as Depreciation Expense
	is a contra asset account
	is used to show the amount of cost expiration of natural resources

Question 2

A characteristic of a fixed asset is that it is

Question 2 options:

	intangible
	used in the operations of a business
	held for sale in the ordinary course of the business
	a short-term investment

Question 3

A used machine with a purchase price of $77,000, requiring an overhaul costing $8,000, installation costs of $5,000, and special acquisition fees of $3,000, would have a cost basis of

Question 3 options:

	$93,000
	$90,000
	$82,000
	$85,000

Question 4

An asset was purchased for $120,000 on January 1, Year 1, and originally estimated to have a useful life of 10 years with a residual value of $10,000. 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 $2,000. Calculate the third-year depreciation expense using the revised amounts and straight-line method.

Question 4 options:

	$25,000
	$11,000
	$24,000
	$24,500

Question 5

On June 1, 2015, Aaron Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years and 30,000 hours. Aaron company uses straight line depreciation for the equipment and operates on a calendar year basis (fiscal year = calendar year).

Calculate the gain or loss if the equipment is sold for $35,000 on January 31, 2018.

Question 5 options:

	$15,000 gain
	$5,000 gain
	$15,000 loss
	$5,000 loss

Question 6

If a fixed asset, such as a computer, was purchased on January 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for the monthly expense under straight-line depreciation is

Question 6 options:

	Depreciation Expense 100 Accumulated Depreciation 100
	Depreciation Expense 1,200 Accumulated Depreciation 1,200
	Accumulated Depreciation 1,200 Depreciation Expense 1,200
	Accumulated Depreciation 100 Depreciation Expense 100