ACC 312 Study Guide - Midterm Guide: Fixed Asset

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greenwalrus59

29 Nov 2017

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Depreciation, the total cost of using a fixed asset over its life, may be defined as the original investment less a portion of its cost recovered (its residual value) at the end of the asset"s useful life. The amount of depreciation calculated for an accounting period is charged as a cost in the profit and loss account, the depreciation charge, for that period. A corresponding amount is also reflected in an account in the balance sheet, the cumulative depreciation provision account, the effect of which is to reduce the original cost of the fixed assets at the end of each accounting period. A number of alternative methods may be used to determine the cost of stock, and therefore the cost of sales: First in first out (fifo) last in first out (lifo) The first four methods of valuation are among the most commonly known, with fifo being by far the most popular.

Related Questions

33. The declining-balance method of depreciation produces a(n)

a. decreasing depreciation expense each period.

b. increasing depreciation expense each period.

c. declining percentage rate each period.

d. constant amount of depreciation expense each period.

34. Which of the following methods will result in the highest depreciation in the first year?

a. Sum-of-year's-digits.

b. Time valuation.

c. Straight-line.

d. Declining-balance.

35. A gain or loss on disposal of a plant asset is determined by comparing the

a. replacement cost of the asset with the asset's original cost.

b. book value of the asset with the asset's original cost.

c. original cost of the asset with the proceeds received from its sale.

d. book value of the asset with the proceeds received from its sale.

36. The book value of a plant asset is the difference between the

a. replacement cost of the asset and its historical cost.

b. cost of the asset and the amount of depreciation expense for the year.

c. cost of the asset and the accumulated depreciation to date.

d. proceeds received from the sale of the asset and its original cost.

azurebat905

QUESTION 1 Which of the following is considered in computing depreciation expense using the straight-line method? A. Net income of the company B. Balance in accumulated depreciation C. Asset's fair value D. Cost of inventory produced by equipment E. Asset's historical cost

QUESTION 2 Which of the following methods of depreciation allocates an equal expense to each period in which the asset is used to generate revenue? A. The sum-of-years' digits method B. The units-of-production method C. The double-declining balance method D. The straight-line method E. The activity depreciation method

QUESTION 3 What type of an account is accumulated depreciation? A. Expense B. Equity C. Loss D. Liability E. Contra asset

4 Which of the following accounting principles dictates that an asset's cost should be expensed over its useful life? A. Matching B. Revenue recognition C. Going concern D. Conservatism E. Consistency 1

QUESTION 5 Opine Company uses the double-declining-balance method of depreciation. It purchases a building with a cost of $560,000, a salvage value of $32,000 and a useful life of 16 years. What is the depreciation expense for the second year? A. $61,250 B. $60,000 C. $57,750 D. $70,000 E. $66,000

QUESTION 6 Clark Company acquired a desk for $500. The estimated salvage value is $50 and the estimated life is 5 years. What journal entry should Clark make to record depreciation expense? A. Depreciation Expense 100 Desk 100 B. Depreciation Expense 90 Desk 90 C. Accumulated Depreciation 90 Depreciation Expense 90 D. Depreciation Expense 90 Accumulated Depreciation 90 E. Depreciation Expense 100 Accumulated Depreciation 100

QUESTION 7 Jacobs Company estimates that its new equipment will last 6 years and have a residual value of $3,000. The original cost of the equipment was $39,000. What would be the balance in the accumulated depreciation account at the end of year 4? A. $0 B. $26,000 C. $24,000 D. $39,000 E. $6,000

QUESTION 18 Which of the following accounts will be shown on the balance sheet with accumulated depreciation account? A. Building B. Prepaid rent C. Cash D. Land E. Goodwill

coralhippopotamus930

The CEO of Herald Corporation has asked you to help him describethe effects of different depreciation methods. Herald
recently purchased a new machine with a capitalized cost of$500,000. The machine has an expected life of 5 years with
no expected salvage value. Select the best response from thosebelow regarding the depreciation for this asset.
A)
if we choose double declining balance depreciation rather thanstraight-line, depreciation expense in the first two
years of this asset's life will be lower
B)
if we choose double declining balance depreciation rather thanstraight-line, net income for the first two years of
this asset's life will be lower
C)
if we choose double declining balance depreciation rather thanstraight-line depreciation, total assets will be
greater at the end of each of the first two years of this asset'slife
D)
two of the above statements are correct
E)
all of the above statements are correct
F)
none of the above statements are correct

maroonbear267

ACC 312 Study Guide - Midterm Guide: Fixed Asset

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