Accounting Chapter 23
Depreciation
Allocating the cost of a plant asset over the asset's useful life is called __.
False
The plant asset record does not list the accumulated depreciation of an asset or its book value at the end of each year.
False
The normal balance of Accum Dep - Computer Equip is a debit.
True
A company will often decide to replace, sell, or discard a plant asset while the asset still has some monetary value.
False
Current assets include cash, merchandise, equipment, and accounts receivable.
Book Value
The original cost of a plant asset less its accumulated depreciation is the __.
False
Depreciation Expense is classified as an expense, has a normal credit balance, and is reported on the income statement.
True
Depreciation Expense is recorded by an adjusting entry in the general journal.
False
Depreciation Expense is reported on the income statement in the cost of goods sold section.
True
Depreciation amounts are estimates of the decrease in value or usefulness of a plant asset over a period of time.
True
For accounting purposes, the cost of land is not depreciated.
True
If estimated annual depreciation is $3,600, a plant asset that was owned only 4 months during the year would have a depreciation expense of $1,200.
False
The adjusting entry for depreciation affects two accounts for each type of plant asset: Depreciation Expense and Delivery Equipment.
False
The amount of depreciation taken for a plant asset is usually recorded in the accounting records at the beginning of the fiscal period.
Current Assets
__ are either used up or converted to cash during a one-year accounting period.
Plant Assets
__ are long-lived assets that are used in the production or sale of other assets or services over several accounting periods
Straight-line depreciation
__ is a method of equally distributing the depreciation expense on a plant asset over its estimated useful life
Accumulated Depreciation
__ is the total amount of depreciation for a plant asset that has been recorded up to a specific point in time.
False
Accumulated Depreciation - Store Equipment is a contra asset account and is reported on the income statement.
True
Accumulated Depreciation is classified as a contra plant asset account.
False
Accumulated Depreciation is reported on the balance sheet as a liability.
False
All plant assets, including land, depreciate in value.
True
The book value of a plant asset is determined by subtracting the accumulated depreciation to date from the initial cost of the asset
True
The cost of a plant asset is the price paid for the asset plus taxes, installation charges and delivery charges.
True
The cost of a plant asset is the price paid for the asset when it is purchased, plus any installation and delivery charges.
True
The estimated disposal value of a plant asset is the part of the asset's cost the business expects to get back at the end of the asset's useful life.
Disposal Value
The estimated value of a plant asset at its replacement time is called __.
True
The straight line method of depreciation allocates the same amount of depreciation expense each year over the estimated useful life of the asset.
