WorksheetsChapter 10 Plant Assets
Total questions: 10
Worksheet time: 5mins
Plant assets are used in operations and have useful lives that extend over more than one accounting period.
True
False
If land is purchased as a building site, the cost of removing existing structures is not charged to the Land account.
True
False
An asset's cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.
True
False
Total asset cost plus depreciation expense equals book value.
True
False
The double-declining balance method is applied by (1) computing the asset's straight-line depreciation rate, (2) doubling it, (3) subtracting salvage value from cost, and (4) multiplying the rate times the net value.
True
False
Depreciation:
Is applied to land
Measures the decline in market value of an asset
Measures physical deterioration of an asset
Is the process of allocating the cost of a plant asset to expense.
Salvage value is:
A factor relevant to determining depreciation under MACRS.
An estimate of the asset's value at the end of its benefit period.
A factor relevant to determining depreciation that cannot be revised during an asset's useful life.
Not a factor relevant to determining depletion.
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
$54,000
$90,000
$42,000
Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the first year of its useful life using the double-declining-balance method?
$2,320.
$300
$600
$680
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 by July 1, Year 5 for $20,000, the journal entry to record the sale will include a:
Credit to cash for $20,000
Credit to loss on sale for $10,000
Debit to gain on sale for $2,500
Debit to loss on sale for $10,000
Debit to accumulated depreciation for $22,500
