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Company Buys Land For $100,000 On 12/31/06

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1. Bale Company buys land for $100,000 on 12/31/06. As of 3/31/07, the land has appreciated in value to $101,000. On 12/31/07, the land has an appraised value of $103,600. By what amount should the Land account be increased in 2007? 
a. $0 
b. $1,000 
c. $2,600 
d. $3,600

2. The term applied to the periodic expiration of a plant asset’s cost is 
a. amortization. 
b. depletion. 
c. depreciation. 
d. cost expiration.

3. Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets? 
a. Salvage value 
b. Estimated useful life 
c. Cash needed to replace the plant asset 
d. Cost

4.The book value of an asset is equal to the 
a. asset's market value less its historical cost. 
b. blue book value relied on by secondary markets. 
c. replacement cost of the asset. 
d. asset's cost less accumulated depreciation. 

5. In computing depreciation, salvage value is 
a. the fair market value of a plant asset on the date of acquisition. 
b. subtracted from accumulated depreciation to determine the plant asset's depreciable cost. 
c. an estimate of a plant asset's value at the end of its useful life. 
d. ignored in all the depreciation methods.

6. All the following are needed for the computation of depreciation except 
a. training costs of manufacturing personnel. 
b. cost. 
c. salvage value. 
d. estimated useful life.

7. Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of 4 years. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours? 
a. $48,000 
b. $52,500 
c. $49,500 
d. $43,500

8. Equipment with a cost of $150,000 has an estimated salvage value of $10,000 and an estimated life of 4 years or 10,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 2,700 hours? 
a. $37,500 
b. $35,000 
c. $37,800 
d. $36,250

9. A company purchased factory equipment on April 1, 2007, for $48,000. It is estimated that the equipment will have a $6,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2007, is 
a. $4,800 
b. $4,200 
c. $3,150 
d. $3,600

10. A company purchased factory equipment on June 1, 2007, for $48,000. It is estimated that the equipment will have a $3,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2007, is 
a. $4,500 
b. $2,625 
c. $2,250 
d. $1,875

11. The Modified Accelerated Cost Recovery System (MACRS) is a depreciation method that 
a. is used for tax purposes. 
b. must be used for financial statement purposes. 
c. is required by the SEC. 
d. expenses an asset over a single year because capital acquisitions must be expensed in the year purchased.

12. On November 1, 2006, Dark Company places a new asset into service. The cost of the asset is $9,000 with an estimated 5-year life and $1,000 salvage value at the end of its useful life. What is the depreciation expense for 2007 if Dark Company uses the straight-line method of depreciation? 
a. $400 
b. $1,600 
c. $266.67 
d. $900

13. On October 1, 2007, Carr Company places a new asset into service. The cost of the asset is $40,000 with an estimated 5-year life and $10,000 salvage value at the end of its useful life. What is the depreciation expense for 2007 if Carr Company uses the straight-line method of depreciation? 
a. $1,500 
b. $8,000 
c. $2,000 
d. $4,000

14. On January 1, a machine with a useful life of five years and a residual value of $5,000 was purchased for $25,000. What is the depreciation expense for year 2 under straight-line depreciation? 
a. $5,000 
b. $15,000 
c. $4,000 
d. $12,000

15. Which depreciation method is most frequently used in businesses today? 
a. Straight-line 
b. Declining-balance 
c. Units-of-activity 
d. Double-declining-balance

16. A plant asset was purchased on January 1 for $40,000 with an estimated salvage value of $8,000 at the end of its useful life. The current year's Depreciation Expense is $4,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $20,000. The remaining useful life of the plant asset is 
a. 10 years. 
b. 8 years. 
c. 5 years. 
d. 3 years.

17. The balance in the Accumulated Depreciation account represents the 
a. amount charged to expense since the acquisition of the plant asset. 
b. cash fund to be used to replace plant assets. 
c. amount charged to expense in the current period. 
d. amount to be deducted from the cost of the plant asset to arrive at its fair market value.

18. The cost of a long-term asset is expensed 
a. in the period in which it is disposed of. 
b. when it is paid for. 
c. in the period in which it is acquired. 
d. as the asset benefits the company.

19. Depreciation is a process of 
a. cost accumulation. 
b. asset valuation. 
c. asset devaluation. 
d. cost allocation.

20. Equipment with a cost of $160,000 has an estimated salvage value of $15,000 and an 
estimated life of 4 years. It is to be depreciated by the straight-line method. What is the amount of depreciation expense in the first year? 
a. $36,250 
b. $40,000 
c. $41,250 
d. $43,750

------------------------------ 
Use the information below for the following question

Great Company purchased a new van for floral deliveries on January 1, 2006. The van cost $20,000 with an estimated life of 4 years and $4,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used.

21. What is the depreciation expense for 2006? 
a. $10,000. 
b. $4,000. 
c. $8,000. 
d. $5,000.

Submitted: 4 years ago.
Category: Homework
Expert:  Manal Elkhoshkhany replied 4 years ago.

Please advise your deadline, name of the book you are using along with the Title, Author's Name and Edition.

Thank you

Customer: replied 4 years ago.

Deadline: is Monday

Financial Accounting: Tools for Business Decision Making - 5th edition

Authors: Kimmel, Weygandt & Kieso

Expert:  Manal Elkhoshkhany replied 4 years ago.
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