Accounting 2 RB Chapter 8 MC & TF
figgins, inc. purchased a truck that it expects to drive 100,000 miles over its useful life. the cost of the truck was $32,000. its estimated salvage value is $2,000, and its useful life is expected to be 5 years. the depreciation rate that would be used for the production-unit method would be
$0.30 per mile
when the declining-balance depreciation method is used, the annual depreciation expense id calculated using the
beginning book value for the current year
The original cost of a plant asset minus accumulated depreciation is called the
book value of a plant asset
the decrease in the value of a plant asset because of the removal of the natural resource is
depletion
at the end of the estimated useful life of a plant asset, it should be depreciated down to its original cost
false
businesses most often use the trade-in price listed by the manufacturer as the estimated salvage value
false
land is not subject to depreciation bc land values usually increase overtime
false
no matter which depreciation method is used, the adjusting entry to record depreciation involves a debit to accumulated depreciation and a credit to depreciation expense
false
since trees are a renewable source, logging businesses record depreciation on the land that contains the timber stands
false
the gain or loss on a traded asset equals the original cost of the old asset less its accumulated depreciation plus the original cost of the new asset
false
the tax rate on real property in the country is 5%. if a buildings book value is $75,000 and its addressed value is $60,000, the annual property tax would be $3,750
false
to charge more depreciation expense in the early years of a plant assets life, the declining-balance method applies a larger percentage rate in those early years
false
when applying the sum-of-the-years-digits depreciation method, the denominator used for all plant assets is 15
false
when land and building are purchased for a single price, the purchase is recorded to a single plant asset account title land and bulidings
false
which of the following is NOT a factor in calculating a plant asset's depreciation expense
method of disposal
the smallest unit of time used to calculate depreciation is
month
land and anything attached to it is called
real property
the method of depreciation calculated by using fractions based on the number of years of a plant assets useful life is
sum-of-the-years-digits
when an asset is traded, the original cost of the new asset recorded in the accounting records is
the cash paid plus the book value of the asset traded
when the plant asset with a book value is discarded at the beginning of a fiscal year, the two journal entries needed are
to remove the original cost of the plant asset and its related depreciation and to recognize the loss
an assets assessed value for property tax purposes may be different from the assets book value
true
the depreciation method required by the internal revenue is known as modified accelerated cost recovery system
true
the going concern concept states that financial statements are prepared with the expectation that a business will remain in operation indefinitely
true
to use the production-unit depreciation method for a vehicle, the estimated useful life must be stated in number of miles
true
wolford stores, inc., bought display shelves for $6,000. they have an estimated salvage value for $1,000 and an estimated useful life for 5 years . the yearly depreciation expense using the straight line method is $1,000
true
