D & D trades an asset that had a book value of $18,000 for another asset with a fair market value of $20,000. Assume lack of commercial substance. J & J pays $500 in cash. D & Dâs asset has a fair market value of $19,500. D & D would record the cost of the new asset at?
$21,500
$18,500
$19,500
$20,000
D & D trades an asset that had a book value of $18,000 for another asset with a fair market value of $20,000. Assume lack of commercial substance. J & J pays $500 in cash. D & Dâs asset has a fair market value of $19,500. D & D would record the cost of the new asset at?
$21,500
$18,500
$19,500
$20,000
Unlock all answers
Related questions
Property and equipment is reported at its:
| A. | historical cost. | |
| B. | market value. | |
| C. | book value. | |
| D. | fair value. | |
| E. | depreciation cost. |
Uganda Corporation estimates the life of its building to be 30 years. It originally cost $300,000 and was given a residual value of $30,000. Depreciation expense per year should be:
| A. | $100,000. | |
| B. | $10,000. | |
| C. | $300,000. | |
| D. | $9,000. | |
| E. | $90,000. |
QUESTION 3
Western Corporation purchased a machine for $20,000 with no residual value and a life of 4 years. What is the book value of the machine at the end of Year 4?
| A. | $5,000 | |
| B. | $16,000 | |
| C. | $4,000 | |
| D. | $0 | |
| E. | $20,000 |
QUESTION 4
The difference between the cost of an asset and its salvage value is its:
| A. | historical cost. | |
| B. | book value. | |
| C. | fair value. | |
| D. | depreciable base. | |
| E. | depreciation expense. |
QUESTION 5
An asset costing $50,000 with accumulated depreciation of $20,000 is sold for $25,000. What is the resulting gain or loss?
| $5,000 gain | ||
| $5,000 loss | ||
| Cannot determine since salvage value is not provided in the question. |
QUESTION 6
Which of the following is an example of an accelerated depreciation method?
| A. | The units-of-production method | |
| B. | The half-year convention method | |
| C. | The fixed assets turnover method | |
| D. | The double-declining balance method | |
| E. | The straight-line method |
QUESTION 7
Mannow Company uses the units-of-production depreciation method. Mannow purchased a machine for $80,000 with no salvage value. Mannow believes the machine will produce 400,000 units. In the first year, 90,000 units are produced. In the second year, 70,000 units are produced. What is the balance in accumulated depreciation at the end of year two?
| A. | $14,000 | |
| B. | $32,000 | |
| C. | $10,000 | |
| D. | $18,000 | |
| E. | $16,000 |
