1.As a company records depreciation expense for a period oftime, cash is accumulated to replace fixed assets as they wearout.
True/False
4.An asset was purchased for $110,000.00 on January 1, Year 1and originally estimated to have a useful life of 11 years with aresidual value of $9,000.00. At the beginning of the third year, itwas determined that the remaining useful life of the asset was only4 years with a residual value of $2,600.00. Calculate thethird-year depreciation expense using the revised amounts andstraight line method.
Select the correct answer.
$22,759.09
$21,259.09
$22,259.09
$23,259.09
5. Costs associated with normal research and developmentactivities should be treated as intangible assets.
True/False
7. The amount of the depreciation expense for the second fullyear of use of a fixed asset costing $100,000, with an estimatedresidual value of $5,000 and a useful life of 4 years, is $25,000by the double-declining-balance method.
True/False
9. The amount of depreciation expense for the first full year ofuse of a fixed asset costing $95,000, with an estimated residualvalue of $5,000 and a useful life of 5 years, is $19,000 by thestraight-line method.
True/False
12. The accumulated depletion of a natural resource is reportedon the:
a. balance sheet as a deduction from the cost of theresource
b. income statement as a deduction from revenues
c. balance sheet as depreciation from the cost of theresource
d. income statement as an increase in revenue
15. An exchange is said to have commercial substance if futurecash flows remain the same as a result of the exchange.
True/False
18 Equipment with a cost of $220,000 has an estimated residualvalue of $30,000 and an estimated life of 10 years or 19,000 hours.It is to be depreciated by the straight-line method. What is theamount of depreciation for the first full year, during which theequipment was used 2,100 hours?
$19,000
$22,000
$30,000
$21,000
30. When exchanging equipment, if the trade-in allowance isgreater than the book value a loss results.
True/False
38. Once the useful life of a depreciable asset has beenestimated and the amount to be depreciated each year has beendetermined, the amounts cannot be changed.
True/False
