Accounting (Hallie) Chapter Quiz 9

method of figuring depreciation called that provides for the same amount of depreciation for each unit produced or used and is favored by companies that operate big machinery with motors

Units of production method

In the journal entry to record depreciation for store equipment, what account is credited

accumulated depreciation

A capital expenditure results in a debit to a(n)

asset account

included in the cost of constructing a building

insurance costs during construction

What are long-term assets that have no physical existence that are useful in the operations of a business and are not held for sale called

intangible assets

Land acquired so it can be resold in the future is listed on the balance sheet as a(n)

investment

Which of the following is not a fixed asset

supplies

All of the following are needed for the computation of straight-line depreciation except

units produced

A characteristic of a fixed asset is that it is

used in the operation of a business

term that describes the estimated amount of time that the company expects to use a fixed asset before disposing of it

useful life

Which of the following statements is true

Regardless of the depreciation method, the amount of total depreciation expense during the life of the asset will be the same.

expenditures on a fixed asset that only benefit the current period called

Revenue Expenditures

All fixed assets except land depreciate.

True

If a piece of equipment is to be depreciated by the units-of-production method, the equipment cost $55,000 with estimated residual value of $5,000 and estimated life of 100,000 operating hours, what would be the amount of depreciation per operating hour

$.50

If a piece of equipment bought on November 1 20Y1 is to be depreciation by the units-of-production method, the equipment cost $55,000 with estimated residual value of $5,000 and estimated life of 100,000 operating hours, what would be the amount of depreciation for the first year of use if it was operated 2,000 hours

$1,000

If a piece of equipment is to be depreciation by the units-of-production method, the equipment cost $55,000 with estimated residual value of $5,000 and estimated life of 100,000 operating hours, what would be the amount of depreciation for the first year of use if it was operated 20,000 hours

$10,000

Assume that equipment with an estimated life of 4 years and an estimated residual value of $1,000 is acquired at a cost of $21,000. Using the double-declining balance method, what is the amount of depreciation for the first year of use of the equipment

$10,500

Assume that the company bought a piece of equipment on July 1 for $120,000, has an estimated residual value of $10,000, and an estimated useful life of 5 years. What is the amount of depreciation for the first year of use using the straight-line method of computing depreciation

$11,000

A building with an appraisal value of $154,000 is made available at an offer price of $172,000. The purchaser acquires the property for $40,000 in cash, a 90-day note payable for $45,000, and a mortgage amounting to $75,000. The cost of the building to be reported on the balance sheet is

$160,000

What is the amount of depreciation, using the double-declining -balance method for the second year of use for equipment costing $9,000, with an estimated residual value of $600 and an estimated life of 5 years

$2,160

Assume that the company bought a piece of equipment on January 1 for $120,000, has an estimated residual value of $10,000, and an estimated useful life of 5 years. What is the amount of depreciation for the first year of use using the straight-line method of computing depreciation

$22,000

Assume that the company bought a piece of equipment on January 1 for $120,000, has an estimated residual value of $10,000, and an estimated useful life of 5 years. What is the amount of depreciation for the second year of use using the straight-line method of computing depreciation

$22,000

Assume that equipment with an estimated life of 4 years and an estimated residual value of $1,000 is acquired at a cost of $21,000. Using the double-declining balance method, what is the amount of depreciation for the second year of use of the equipment

$5250

Equipment purchased on January 3, 20Y2, for $80,000 was depreciated using the straight-line method based upon a 5-year life and $7,500 residual value. The equipment was sold on December 31, 20Y4, for $30,000. Denote either a gain or loss on the sale of equipment and the amount

$6,500 Loss

A useful life of 10 years is equivalent to what straight-line depreciation rate

.10

Equipment purchased on January 3, 20Y2, for $80,000 was depreciated using the straight-line method based upon a 5-year life and $7,500 residual value. The equipment was sold on December 31, 20Y4, for $40,000. Denote either a gain or loss on the sale of equipment and the amount

3,500 gain

What is the book value of a piece of equipment that cost $50,000 and has accumulated depreciation of $20,000

30,000

account that is the name of the contra asset in which depreciation is recorded as a credit

Accumulated Depreciation

Fixed assets are ordinarily presented on the balance sheet

At cost less accumulated depreciation

The cost of a fixed asset minus accumulated depreciation is called what

Book Value

Immediately after a used truck is acquired, a new motor is installed at a cost of $5,000. What type of expenditure is this

Capital Expenditure

initial amount paid to the supplier for the fixed asset plus any shipping and necessary cost of acquiring the asset called

Cost

depreciation method that does not use residual value in computing the first year's depreciation expense is

Double-declining-balance

formula for annual depreciation using the straight-line depreciation method is

Depreciable Cost ÷ Estimated Useful Life

systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life called

Depreciation

In the journal entry to record depreciation for store equipment, what account is debited

Depreciation Expense

example of an accelerated depreciation method

Double-declining balance

You can continue to record depreciation on a fixed asset as long as the asset is still being used in the business.

False

long-term or relatively permanent tangible assets that are used in the normal business operations called

Fixed Assets

formula for depreciable cost is

Initial Cost - Residual Value

expenditures incurred in connection with acquiring machinery is a proper charge to the asset account

Installation cost

Long-term tangible assets that are owned and held for resale called

Investments

the gain or loss on sale of a fixed asset if a piece of equipment with a book value of $12,000 is sold for $11,500

Loss on disposal of fixed asset of $500

The proper journal entry for the purchase of a computer costing $975 on account to be utilized within the business would be

Office equipment (Debit) 975 Accounts Payable (Credit) 975

method of computing the amount of annual depreciation is used most often in the business world

Straight-line method

company discards machinery that is fully depreciated, this transaction would be journalized as a

debit to Accumulated Depreciation and a credit to Machinery

company sells machinery at a price equal to its book value, this transaction would be journalized as a

debit to Cash and Accumulated Depreciation and a credit to Machinery

method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is the

double-declining-balance method

Expected useful life is

estimated at the time that the asset is placed in service

term that refers to the projected value based on what the asset is expected to be worth when the company plans to dispose of it

residual value