Chapter 9

1.
	The normal balance of the accumulated depreciation account is debit. Student Response Value Correct Answer Feedback 1. True 2. False 100% Score: 1/1
2.
	Though a piece of equipment is still being used, the equipment should be removed from the accounts if it has been fully depreciated. Student Response Value Correct Answer Feedback 1. True 2. False 100% Score: 1/1
3.
	Revising depreciation estimates does affect the amounts of depreciation expense recorded in past periods. Student Response Value Correct Answer Feedback 1. False 100% 2. True Score: 1/1
4.
	As a company depreciates a piece of equipment, it cash flow goes up. Student Response Value Correct Answer Feedback 1. False 2. True 0% Score: 0/1
5.
	When depreciation estimates are revised, all years of the asset’s life are affected. Student Response Value Correct Answer Feedback 1. False 2. True 0% Score: 0/1
6.
	If a fixed asset, such as a computer, were purchased on January 1st for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is: (Note: EOM indicates the last day of each month.) Student Response Value Correct Answer Feedback 1. EOM Accumulated Depreciation 100 Depreciation Expense 100 2. EOM Accumulated Depreciation 1,200 Depreciation Expense 1,200 3. EOM Depreciation Expense 100 Accumulated Depreciation 100 100% 4. EOM Depreciation Expense 1,200 Accumulated Depreciation 1,200 Score: 1/1
7.
	A fixed asset with a cost of $41,000 and accumulated depreciation of $36,500 is traded for a similar asset priced at $60,000. Assuming a trade-in allowance of $3,000, the recognized loss on the trade is Student Response Value Correct Answer Feedback 1. $ 500 2. $3,000 3. $4,500 4. $1,500 100% Score: 1/1
8.
	An estimate of the amount which an asset can be sold at the end of its useful life is called residual value. Student Response Value Correct Answer Feedback 1. True 100% 2. False Score: 1/1
9.
	Equipment with a cost of $160,000, an estimated residual value of $40,000, and an estimated life of 15 years was depreciated by the straight-line method for 4 years. Due to obsolescence, it was determined that the useful life should be shortened by 3 years and the residual value changed to zero. The depreciation expense for the current and future years is Student Response Value Correct Answer Feedback 1. $11,636 2. $16,000 100% 3. $8,000 4. $11,000 Score: 1/1
10.
	When a company discards machinery that is fully depreciated, this transaction would be recorded with the following entry Student Response Value Correct Answer Feedback 1. debit Accumulated Depreciation; credit Machinery 100% 2. debit Depreciation Expense; credit Accumulated Depreciation 3. debit Machinery; credit Accumulated Depreciation 4. debit Cash; credit Accumulated Depreciation Score: 1/1
11.
	An exchange is said to have commercial substance if future cash flows remain the same as a result of the exchange. Student Response Value Correct Answer Feedback 1. False 100% 2. True Score: 1/1
12.
	On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $30,000. What is the amount of the gain or loss on this transaction? Student Response Value Correct Answer Feedback 1. No gain or loss 100% 2. Cannot be determined 3. Loss of $30,000 4. Gain of $30,000 Score: 1/1
13.
	Both the initial cost of the asset and the accumulated depreciation will be taken off the books with the disposal of the asset. Student Response Value Correct Answer Feedback 1. True 100% 2. False Score: 1/1
14.
	Computer equipment was acquired at the beginning of the year at a cost of $65,000 that has an estimated residual value of $3,000 and an estimated useful life of 5 years. Determine the 2nd year’s depreciation using straight-line depreciation. Student Response Value Correct Answer Feedback 1. $12,400 100% 2. $24,800 3. $26,000 4. $13,000 Score: 1/1
15.
	A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 is sold for $3,500. What is the amount of the gain or loss on disposal of the fixed asset? Student Response Value Correct Answer Feedback 1. $2,000 gain 100% 2. $1,500 loss 3. $3,500 gain 4. $2,000 loss Score: 1/1
16.
	Capital expenditures are costs of acquiring, constructing, adding, or replacing property, plant and equipment. Student Response Value Correct Answer Feedback 1. True 100% 2. False Score: 1/1
17.
	The amount of depreciation expense for a fixed asset costing $95,000, with an estimated residual value of $5,000 and a useful life of 5 years or 20,000 operating hours, is $21,375 by the units-of-production method during a period when the asset was used for 4,500 hours. Student Response Value Correct Answer Feedback 1. False 100% 2. True Score: 1/1
18.
	Which intangible assets are amortized over their useful life? Student Response Value Correct Answer Feedback 1. goodwill 2. all of the above 0% 3. patents 4. trademarks Score: 0/1
19.
	A building with an appraisal value of $147,000 is made available at an offer price of $152,000. The purchaser acquires the property for $35,000 in cash, a 90-day note payable for $45,000, and a mortgage amounting to $65,000. The cost basis recorded in the buyer's accounting records to recognize this purchase is Student Response Value Correct Answer Feedback 1. $152,000 2. $147,000 3. $110,000 4. $145,000 100% Score: 1/1
20.
	To a major resort, timeshare properties would be classified as property, plant and equipment. Student Response Value Correct Answer Feedback 1. True 100% 2. False Score: 1/1