Fixed Assets 1

Which is a characteristic of a fixed asset?

• Short-term and impermanent.

•   Only leased, not owned, by the company but used in normal operations.

•   Exist physically so they are tangible assets.

• Offered for sale as part of normal operations.

The difference between a fixed asset’s initial cost and residual value is known as its

• depreciable cost

• book value

• accumulated depreciation

• net revenue

Cost less accumulated depreciation equals

• depreciable cost

• book value

• residual value

• None of these choices are correct

Which of the following should be included in the acquisition cost of a piece of equipment?

• transportation costs

• testing costs prior to placing the equipment into production

• installation costs

• all of these choices

All of the following fixed assets are depreciated EXCEPT

• building

• truck

• land

• equipment

If a purchased item is long-lived but not used in normal operations, the asset is classified and recorded as a(n)

• fixed asset

• investment

• expense

• contra asset

Which of the depreciation methods is called an accelerated depreciation method?

• Straight-line method

• Double-declining-balance method

• Units-of-activity method

• All of these choices are correct

Accumulated depreciation would be shown on which financial statement?

• Balance sheet

• Income statement

• Statement of cash flows

• None of these choices are correct

Equipment acquired at the beginning of the year at a cost of $125,000 has an estimated residual value of $5,000 and an estimated useful life of 10 years. Using double-declining-balance method, the year-end net book value for the first year is

• $100,000

• $113,000

• $25,000

• 12,000

Equipment acquired at the beginning of the year at a cost of $125,000 has an estimated residual value of $5,000 and an estimated useful life of 10 years. Using straight-line method, the year-end net book value for the first year is

• 12,000

• 113,000

• 120,000

• 125,000