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FA chapter 7 quick check

meli ssa 12 questions 5.0 (1 rating)

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Questions in this quiz (12)

  1. 1Bretman, Inc., purchased a tract of land, a small office building, and some equipment for
    $1,800,000. The appraised value of the land was $1,420,000, the building $650,000, and
    the equipment $430,000. What is the cost of the land?
    1. A$600,000
    2. B$1,022,400
    3. C$1,420,000
    4. DNone of the above
  2. 2Which statement is false?
    1. ADepreciation is based on the matching principle because it matches the cost of the asset
      with the revenue generated over the asset’s useful life.
    2. BDepreciation is a process of allocating the cost of a PPE over its useful life.
    3. C. Depreciation creates a fund to replace the asset at the end of its useful life
    4. DThe cost of a PPE minus accumulated depreciation equals the asset’s book value
  3. 3On July 1, 20X6, Amir Communications purchased a new piece of equipment that cost $65,000.
    The estimated useful life is 10 years and estimated residual value is $5,000.
    3. What is the depreciation expense for 20X6 if Amir uses the straight-line method?
    1. A$3,000
    2. B. $6,000
    3. C$3,250
    4. D$6,500
  4. 4On July 1, 20X6, Amir Communications purchased a new piece of equipment that cost $65,000.
    The estimated useful life is 10 years and estimated residual value is $5,000.
    Assume Amir Communications purchased the equipment on January 1, 20X6. If Amir uses
    the straight-line method for depreciation, what is the asset’s book value at the end of 20X7?
    1. A$54,000
    2. B$59,000
    3. C$48,000
    4. D$53,000
  5. 5On July 1, 20X6, Amir Communications purchased a new piece of equipment that cost $65,000.
    The estimated useful life is 10 years and estimated residual value is $5,000.
    Assume Amir Communications purchased the equipment on January 1, 20X6. If Amir uses
    the double-declining-balance method, what is the depreciation for 20X7?
    1. A$13,000
    2. B$10,400
    3. C$12,000
    4. D. $9,600
  6. 6On July 1, 20X6, Amir Communications purchased a new piece of equipment that cost $65,000.
    The estimated useful life is 10 years and estimated residual value is $5,000.
    Return to Amir’s original purchase date of July 1, 20X5. Assume that Amir uses the
    straight-line method of depreciation and sells the equipment for $44,500 on July 1, 20X9.
    The result of the sale of the equipment is a gain (loss) of
    1. A$3,500
    2. B$8,500.
    3. C$ (15,500).
    4. D$0
  7. 7. A company bought a new machine for $30,000 on January 1. The machine is expected to
    last five years and has a residual value of $6,000. If the company uses the doubledeclining-balance method, accumulated depreciation at the end of year 2 will be
    1. A. $12,000
    2. B$9,600.
    3. C. $19,200.
    4. D$15,360.
  8. 8Which of the following is not a capital expenditure?
    1. AA complete overhaul of an air-conditioning system
    2. B. Replacement of an old motor with a new one in a piece of equipment
    3. CThe cost of installing a piece of equipment
    4. DThe addition of a building wing
    5. EA tune-up of a company vehicle
  9. 9Which of the following assets is not subject to a decreasing book value through depreciation, depletion, or amortization?
    1. AGoodwill
    2. BLand improvements
    3. C. Natural resources
    4. DIntangibles
  10. 10Why would a business select an accelerated method of depreciation for tax purposes?
    1. AAccelerated depreciation will result in higher gain on disposal of PPE than straight-line
      depreciation.
    2. BAccelerated depreciation generates a greater amount of depreciation over the life of the
      asset than does straight-line depreciation.
    3. CAccelerated depreciation is easier to calculate because salvage value is ignored
    4. DAccelerated depreciation generates higher depreciation expense immediately, and
      therefore lowers tax payments in the early years of the asset’s life.

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Description
Quiz on FA chapter 7 quick check, created by meli ssa on 19/02/2019.
Author
meli ssa
Language
English
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