1. An asset having an eight-year service life and a salvage value of $14,000 was acquired for $142,000 cash on April 5. Using straight-line depreciation, what will be the depreciation expense at the end of the first year and for the entire second year? The accounting period ends on December 31st.

A) $12,000 and $16,000

B) $24,000 and $16,000

C) $16,000 And $16,000

D) $20,000 and $16,000

E) None of the above

2. If an asset is purchased on the 19th of a month, when should the firm begin depreciating that asset if it uses the partial-year depreciation procedures available to them?

A) The firm should start depreciating the asset at the beginning of the year in which the asset was purchased.

B) The firm should start depreciating the asset at the beginning of the month in which the asset was purchased.

C) The firm should start depreciating the asset at the beginning of the month after purchase.

D) The firm should start depreciating the asset at the beginning of the year after the asset was purchased.

E) None of the above.

3. A piece of equipment with a cost of $710,000 and accumulated depreciation of $641,000 was sold for $57,000. The journal entry to record the sale of this equipment would include all except which of the following?

A) Loss on Disposal of Equipment, debit, $12,000.

B) Gain on Disposal of Assets, credit, $12,000.

C) Equipment, credit, $710,000.

D) Cash, debit, $57,000.

E) Accumulated Depreciation, Equipment, debit, $641,000.

4. The Ophir Mining Company acquired an iron ore deposit for $6,000,000. The company's geologist estimated the deposit to contain 7,500,000 tons of iron ore. At the end of the first year, 900,000 tons had been extracted. The end-of-year journal entry to record the depletion of the iron ore would require which of the following?

A) A credit to Iron Ore Deposit of $900,000.

B) A debit to Depletion Expense of $900,000.

C) A credit to Accumulated Depletion of $720,000.

D) A debit to Accumulated Depletion of $720,000.

E) None of the following.

5. Concerning U.S. GAAP and IFRS, which one of the following statements is true?

A) IFRSs permit revaluation of plant assets to market value if market value is reliably determined.

B) IFRSs are similar to U.S. GAAP and use the historical cost of plant assets on the balance sheet.

C) IFRSs do not permit an annual review of useful life estimates.

D) IFRSs do not permit an annual review of salvage value estimates.

E) U.S. GAAP and IFRSs are similar in all estimates.

Answer rating: 100% (QA)

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