Quiz 7

The amount of the gain on the sale of equipment equals:

The selling price minus the book value of the equipment.

If equipment is retired, which of the following accounts would be debited?

Accumulated depreciation.

The asset's cost less accumulated depreciation is called:

Book value.

Which of the following depreciation methods typically results in the highest depreciation expense during the first year of an asset's life?

Double declining balance method.

Which of the following expenditures should be recorded as an asset?

Interest costs during the construction period of a new building.

Which of the following will maximize net income by minimizing depreciation expense in the first year of the asset's life?

Long service life, high residual value, and straight-line depreciation.

An exclusive 20-year right to manufacture a product or to use a process is a:

Patent

Which of the following will result in higher depreciation expense in the first year of the asset's life?

Short service life and low residual value.

Which of the following statements is false regarding the amortization of intangible assets?

The service life of an intangible asset is always equal to its legal life.