Post Quiz 7

Which of the following would be classified as a natural resource?

• Patent on an oil extraction process

• Land held as an investment.

• Land improvements.

• Diamond mine.

A machine is purchased for $40,000. The transportation cost from the seller was $2,000, installation costs were $1,000 and taxes on the purchase price were $600. Testing runs of the new machine cost $5,000. What is the cost of the machine?

• $40,000

• $43,000

• $43,600

• $48,600

Marks Consulting purchased equipment costing $45,000 on January 1, Year 1. The equipment is estimated to have a salvage value of $5,000 and an estimated useful life of 8 years. Straight-line depreciation is used. If the equipment is sold on July 1, Year 5 for $20,000, the journal entry to record the sale will include a:

• Credit to cash for $20,000.

• Debit to accumulated depreciation for $22,500.

• Debit to loss on sale for $10,000.

• Credit to loss on sale for $10,000.

A photocopier cost $104,000 when new and has accumulated depreciation of $95,000. If the business discards this plant asset, the result is ________.

• a loss of $9000

• a loss of $95,000

• a gain of $9000

• no gain or no loss

The journal entry to record an addition to an office building would include:

• credit to Depreciation Expense.

• credit to Accumulated Depreciation.

• debit to Repair Expense

• debit to Office Building.

A company purchased a machine for $500,000. The accumulated depreciation on the machine is now $150,000. The machine is junked. Which journal entry is prepared to record the disposal?

• debit Loss on Disposal of Machine for $350,000, debit Accumulated Depreciation - Machine $350,000 and credit Machine for $700,000

• debit Accumulated Depreciation - Machine for $150,000 and credit Machine for $150,000

• debit Accumulated Depreciation - Machine for $500,000, credit Machine for $150,000 and credit Gain on Disposal of Machine for $350,000

• debit Loss on Disposal of Machine for $350,000, debit Accumulated Depreciation - Machine for $150,000 and credit Machine for $500,000

Carpenters Company, a manufacturing company, acquired equipment on January 1, 2017 for $510,000. The estimated useful life of the equipment was seven years and the estimated residual value was $12,000. On January 1, 2020, after using the equipment for three years, the total estimated useful life has been revised to nine total years. Residual value remains unchanged. The company uses the straight-line method of depreciation. Calculate depreciation expense for 2020. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

• $48,571

• $47,429

• $56,667

• $55,333

When originally purchased, a vehicle costing $23,000 had an estimated useful life of 8 years and an estimated salvage value of $3,000. After 4 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. The depreciation expense in year 5 equals:

• $5,000

• $2,875.

• $5,750.

• $11,500.

A company had average total assets of $887,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover equals:

• 0.81.

• 0.89.

• 1.09.

• 1.13.

Beckman Enterprises purchased a depreciable asset on October 1, Year 1 at a cost of $100,000. The asset is expected to have a salvage value of $20,000 at the end of its five-year useful life. If the asset is depreciated on the double-declining-balance method, the asset's book value on December 31, Year 2 will be:

• $36,000

• $42,000

• $54,000

• $16,000