Multiple Choice Questions(Plant Assets & Intangibles)

Multiple Choice Questions(Plant Assets & Intangibles)

7.4-10 If an asset is scrapped before being fully
depreciated:

A) the
company will incur a loss on the disposal.

B) the
equipment account will be credited.

C) the
accumulated depreciation account will be debited.

D) all of the
above will occur.

7.4-11 When plant assets are exchanged:

A) the old
asset does not need to be removed from the books.

B) the new
asset will be debited for the list price of the asset.

C) the gain
or loss on the exchange is equal to the difference between the fair value and
the book value of the old asset.

D) total
assets increase.

7.4-12 Patch Company sold some office furniture for $4,800 cash.
The furniture cost $31,500 and had accumulated depreciation through the date of
sale totaling $29,300. The journal entry to record the sale of the furniture
will include a:

A) debit to
Loss on Sale of Furniture for $26,700.

B) debit to
Gain on Sale of Furniture for $2,600.

C) credit to
Gain on Sale of Furniture for $2,600.

D) credit to
Loss on Sale of Furniture for $26,700.

55

7.4-13
Hawthorne Company sold an old computer for $3,000 cash. The computer cost
$45,000 and had accumulated depreciation through the date of sale totaling
$42,000. The company will recognize:

A) a gain of $3,000.

B) a loss of
$3,000.

C) neither a
gain nor a loss.

D) a loss of
$37,500.

7.4-14 Smucker’s Company sold equipment
costing $65,000 with $60,000 of accumulated depreciation for $10,000 cash. The
company’s journal entry to record this sale will NOT include a:

A) credit to
Equipment for $65,000.

B) credit to
Gain on Sale of Equipment for $5,000.

C) debit to
Accumulated Depreciation for $60,000.

D) debit to
Gain on Sale of Equipment for $5,000.

56

7.4-15
Equipment costing $47,500 with a book value of $22,500 is sold for $26,000. The
journal entry will involve a ___________ to Accumulated Depreciation.

A) credit of
$25,000

B) debit of
$22,500

C) debit of
$25,000

D) credit of
$22,500

7.4-16 Equipment
purchased for $85,000 on January 1, 2010, was sold on July 1, 2013. The company
uses the straight-line method of computing depreciation and recognizes $17,000
of depreciation expense annually. When recording the sale, the company should
record a debit to Accumulated Depreciation for:

A) $51,000.

B) $59,500.

C) $68,000.

D) nothing;
Accumulated Depreciation is not debited.

57

7.4-17
Equipment acquired on January 1, 2010, is sold on June 30, 2013, for $11,200.
The equipment cost $26,800, had an estimated residual value of $6,800, and an
estimated useful life of 5 years. The company prepared financial statements on
December 31, and the equipment has been depreciated using the straight-line
method. Prior to determining the gain or loss on the sale of this equipment,
the company should record depreciation of:

A) $2,000.

B) $5,000.

C) $31,700.

D) nothing;
no entry is required.

7.4-18 Great Farms
Company sold some fully depreciated equipment for $4,100 cash. The equipment
had been purchased for $49,600, and the company had estimated the useful life
at 8 years and a residual value at $5,600. How will this sale affect Retained
Earnings?

A) It will
decrease Retained Earnings by $44,000.

B) it will
decrease Retained Earnings by $1,500.

C) It will
increase Retained Earnings by $4,100.

D) It will
have no effect on Retained Earnings.

58

7.4-19
Tomas Company trades in a printing press for a newer model. The cost of the old
printing press was $61,500, and accumulated depreciation up to the date of the
trade-in amounts to $38,000. The company also pays $41,200 cash for the newer
printing press. The journal entry to acquire the new printing press will
require a debit to Equipment for:

A) $41,200.

B) $61,500.

C) $64,700.

D) $102,700.


Price: £ 45

100% Plagiarism Free & Custom Written, Tailored to your instructions

Leave your Comments


Can't read the image? click here to refresh