ACCOUNTING

113. Betterments:
A. Are expenditures making a plant asset more efficient or productive.
B. Are also called improvements.
C. Do not always increase an asset’s life.
D. Are capital expenditures.
E. All of these.

 

114. An asset’s book value is $18,000 on June 30, 2008. The asset is being depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, 2009 for $15,000, the company should record:
A. A loss on sale of $1,500.
B. A gain on sale of $1,500.
C. Neither a gain nor a loss is recognized on this type of transaction.
D. A gain on sale of $3,000.
E. A loss on sale of $3,000.

 

115. An asset’s book value is $36,000 on January 1, 2008. The asset is being depreciated $500 per month using the straight-line method. Assuming the asset is sold on July 1, 2009 for $25,000, the company should record:
A. Neither a gain or loss is recognized on this type of transaction.
B. A gain on sale of $2,000.
C. A loss on sale of $1,000.
D. A gain on sale of $1,000.
E. A loss on sale of $2,000.

 

 

116. Information on a depreciable asset owned by Wilson Engineering is as follows:

If the asset is sold on July 1, 2012 for $20,000, the journal entry to record the sale will include:
A. A credit to cash for $20,000.
B. A debit to accumulated depreciation for $22,500.
C. A debit to loss on sale for $10,000.
D. A credit to loss on sale for $10,000.
E. A debit to gain on sale for $2,500.

117. Information on a depreciable asset is as follows:  

If the asset is sold on January 1, 2011 for $13,000, the journal entry to record the sale will include:
A. A credit to gain on sale for $8,000.
B. A debit to loss on sale for $2,625.
C. A credit to accumulated depreciation for $59,375.
D. A debit to loss on sale for $3,042.
E. A credit to gain on sale for $4,979.

 

118. An asset can be disposed of by:
A. Discarding it.
B. Selling it.
C. Exchanging it for another asset.
D. Donating it to charity.
E. All of these.

119. A company sold a machine that originally cost $100,000 for $60,000 cash. The accumulated depreciation on the machine was $40,000. The company should recognize a:
A. $0 gain or loss.
B. $20,000 gain.
C. $20,000 loss.
D. $40,000 loss.
E. $60,000 gain.

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