True/False

Indicate whether the sentence or statement is true or false.

____ 16. A loan in which the lender deducts interest from the amount borrowed before the money is advanced to the borrower is called a discounted note.

____ 17. If a fixed asset with a book value of $10,000 is traded for a similar fixed asset, and a trade-in allowance of $15,000 is granted by the seller, the buyer would report a gain on disposal of fixed assets of $5,000 (assume this exchange lacks Commercial Substance).

____ 18. The book value of a fixed asset reported on the balance sheet represents its market value on that date.

____ 19. In order to be a journalized/recorded contingent liability, the liability must be possible and reasonable.

____ 20. The acquisition costs of property, plant, and equipment should include all normal, reasonable and necessary costs to get the asset in place and ready for use.

____ 21. An estimate of the amount which an asset can be sold at the end of its useful life is called residual value.

____ 22. Federal unemployment taxes are paid by the employer and the employee.

____ 23. When minor errors occur in the estimates used in the determination of depreciation, the amounts recorded for depreciation expense in the past should be corrected.

____ 24. Residual value is not relevant when calculating the annual depreciation expense using the double declining-balance method (do not consider the calculation for the final year).

____ 25. Taxes deducted from an employee's earnings to finance Social Security and Medicare benefits are called FICA taxes.