CH7 Learnsmart
When selling a fixed asset, the seller recognizes a gain or loss for the difference between the amount received and the ______ value of the asset sold.
book
The original cost of an asset minus accumulated depreciation is
book value
The original cost of the asset less the accumulated depreciation is the _______ ________ of the asset.
book value
Long-term tangible assets include
equipment, land, buildings
Depletion
Allocation of the cost of a natural resource over its service life
Depreciation
Allocation of the cost of a tangible fixed asset
The gain or loss on disposal of an asset is calculated as:
amount receives less the book value of asset sold
Amortization
Allocation of the cost of an intangible asset over its service life
Krasel Corporation exchanges old equipment for new equipment. The original cost of the old equipment was $90,000, and its accumulated depreciation at the date of exchange was $70,000. The new asset received had a fair value of $50,000 and a book value of $45,000. The journal entry to record this exchange will include which of the following entries?
Credit gain on exchange of asset $30,000Credit equipment $90,000Debit equipment $50,000Debit accumulated depreciation $70,000
Cheng Corporation exchanges old equipment for new equipment. The original cost of the old equipment was $90,000, and its accumulated depreciation at the date of exchange was $40,000. The new equipment received had a fair value of $40,000 and a book value of $35,000. The journal entry to record this exchange will include which of the following entries?
Debit equipment $40,000 Debit loss on exchange $10,000 Credit equipment $90,000 Debit accumulated depreciation $40,000
Which of the following are long-term tangible assets?
Equipment, property
Which of the following are expenditures for assets subsequent to acquisition?
Repairs and maintenance, additions, improvements
The initial cost of property, plant, and equipment includes the purchase price and all expenditures necessary to bring the asset to its desired condition and location for use.
True, all costs should be capitalized to bring the asset to its intended and useful state.
The types of expenditures that can occur subsequent to an asset's acquisition are
additions, repairs and maintenance, improvements
The purchase price and all costs to bring an asset to its desired condition and location for use should be ______.
capitalized
The journal entry to retire old equipment that is not fully depreciated includes a:
debit to loss, debit to accumulated depreciation, credit to equipment
The allocation of the cost of a tangible asset over its service life is referred to as
depreciation
An asset that has no physical substance is referred to as a(n)
intangible asset
What is the formula for the profit margin ratio?
net income/net sales
A retirement or abandonment of an asset is different from a sale of an asset because
no cash is received, a loss must be recognized for the remaining book value