Depreciation and Asset Valuation Quiz

On a statement of financial position, natural resources may be described more specifically as all of the following except

• land improvements

• mineral deposits

• oil reserves

• timberlands

Which of the following methods of computing depreciation is production based?

• Straight-line

• Declining-balance

• Units-of-activity

• None of these answer choices are correct

The book value of an asset is equal to the

• asset's fair value less its historical cost.

• blue book value relied on by secondary markets.

• replacement cost of the asset.

• asset's cost less accumulated depreciation.

Goodwill

• is only recorded when generated internally

• can be subdivided and sold in parts

• can only be identified with the business as a whole

• can be defined as normal earnings less accumulated amortization

Ordinary repairs are expenditures to maintain the operating efficiency of a plant asset and are referred to as

• capital expenditures

• expense expenditures

• improvements

• revenue expenditures

Which item is not included in the cost of a business truck purchase?

• Sales tax

• Accident insurance

• Freight charges

• Truck lettering cost

All of the following are depreciation estimates except:

• Cost

• Residual value

• Salvage value

• Useful life

Depreciation:

• Is an asset valuation process during ownership

• Applies to all land and equipment assets

• Is a contra-asset on the balance sheet

• Helps accumulate cash for asset replacement

What does the Accumulated Depreciation account balance represent?

• Funds for asset replacement

• Expense charged in current period

• Expense charged since asset purchase

• Deduction to find fair asset value

Depreciation allocates a fixed asset's cost over its life:

• In an equal, fair manner

• Using an accelerated, accurate way

• In a systematic, rational way

• Based on market value changes