Question (1): State whether the following statements are true or false with a suitable comment: 1) All plant assets (fixed assets) must be depreciated for accounting purposes 2) The book value of a plant asset is the amount originally paid for the asset less anticipated salvage value 3) Salvage value is not subtracted from plant asset cost in determining depreciation expense under the declining-balance method of depreciation. 4) Recording depreciation on plant assets affects the balance sheet and the income statement. 5) A company purchased land for $90,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be recorded at 102,000. 6) All the factors in computing depreciation are estimates exceptsalvage value 7) A truck was purchased for 5180,000 and it was estimated to have a $36,000 salvage value at the end of its useful life. The annual depreciation expense of $36,000 was recorded using the straight-line method. The annual depreciation rate is 20% 8) When an account becomes uncollectible and must be written off, Accounts Receivable should be credited. 9) Valli Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $700,000 and credit sales are $2,500,000. Management estimates that 1% is the sales percentage to use. The adjusting entry to record the bad debts expense will be: Bad Debt Expense 32,000 Accounts Receivable ....32,000 10) Closing entries are necessary for both permanent and temporary accounts. 11) If income summary has a credit balance after revenues and expenses have been closed into it, the closing entry for income summary will include a debit to the owner's capital account. 12) Closing entries cause the revenue and expense accounts to have zero balances