When a company disposes of a depreciable asset, depreciation is calculated based on the last year date of disposal.

Question options:

	a) True
	b) False

Question 2

If a company truck that cost $12,000, with a book value of $10,000 is sold for $4,000, the sale would result in a:

Question options:

a)	Loss of $2,000.

b)	Gain of $4,000.

c)	Gain of $2,000.

d)	No loss or gain.

Question 3

Accounting gains and losses on the disposal of depreciable assets are determined by comparing:

Question options:

a)	the asset's book value and the net disposal proceeds.

b)	the original cost and the asset's book value.

c)	the original cost and the asset's replacement cost.

d)	the original cost and the net disposal proceeds.

Question 4

Zippy Company purchased equipment for $24,000 with an estimated salvage value of $4,000. It also estimates a useful life of 5 years. If the company used the straight-line depreciation method the depreciation expense would be:

Question options:

a)	$2,000 each year.

b)	$5,000 each year.

c)	$4,800 each year.

d)	$4,000 each year.

Question 5

A machine that cost $15,000 with a book value of $1,500 is sold for $1,900, and an entry is made. Which of the following is true about the entry?

Question options:

a)	Accumulated Depreciation is debited for $2,000.

b)	Machinery is credited for $1,500.

c)	Loss on Sale of Machinery is credited for $1,900.

d)	Accumulated Depreciation is debited for $13,500.

e)	None of these.

Question 6

Gaston recently incurred costs associated with replacing the oil in one of its tractors. How should this cost be accounted for?

Question options:

a)	As a repair and maintenance expense.

b)	As an increase in the cost basis of the tractor.

c)	As a reduction of accumulated depreciation associated with the tractor.

d)	As an intangible.

e)	None of these.