Principles of Accounting I Module 10 Quiz Module 10 - Chapter 9

When a company discards machinery that is fully depreciated, this transaction would be journalized with which entry?

• debit Accumulated Depreciation and credit Machinery

• debit Machinery and credit Accumulated Depreciation

• debit Cash and credit Accumulated Depreciation

• debit Depreciation Expense and credit Accumulated Depreciation

Freight costs paid on the purchase of new equipment would be debited to which of the following accounts?

• Factory Building

• Machinery and Equipment

• Freight In

• Land Improvements

The higher the fixed asset turnover ratio, the

• less efficiently a company is using its fixed assets in generating sales

• more efficiently a company is using its fixed assets in generating sales

• more efficiently a company is using its current assets in generating sales

• more efficiently a company is using its intangible assets in generating sales

The book value of a fixed asset reported on the balance sheet represents its market value on that date.

• True

• False

When a plant asset is traded for another similar asset, losses on the asset traded are not recognized.

• True

• False

The cost of installing new equipment would be debited to which of the following accounts?

• Buildings

• Machinery and Equipment

• Repairs and Maintenance Expense

• Land Improvements

Resurfacing a pool in an apartment building would be classified as

• ordinary maintenance and repairs

• asset improvements

• extraordinary repairs

• none of these choices

The acquisition of a new machine with a purchase price of $109,000, transportation costs of $12,000, installation costs of $5,000, and special acquisition fees of $6,000 would be journalized with a debit to the asset account for

• $114,000

• $126,000

• $121,000

• $132,000

On December 31, Strike Company sold one of its batting cages for $55,000. The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. What is the amount of the gain or loss on this transaction?

• loss of $55,000

• loss of $5,000

• gain of $5,000

• gain of $55,000

Equipment with a cost of $160,000, an estimated residual value of $40,000, and an estimated life of 15 years was depreciated by the straight-line method for 4 years. Due to obsolescence, it was determined that the remaining useful life should be shortened by 3 years and the residual value changed to zero. The depreciation expense for the current and future years is

• $11,636

• $16,000

• $11,000

• $8,000