Question: SELECT THE BEST ANSWER (IS REQUIRED TO SHOW COMPUTATIONS AND REFERENCES) 1. A fixed asset with a cost of $52,000 and accumulated depreciation of $47,500
SELECT THE BEST ANSWER (IS REQUIRED TO SHOW COMPUTATIONS AND REFERENCES)
1. A fixed asset with a cost of $52,000 and accumulated depreciation of $47,500 traded for a similar asset priced at $60,000 in a transaction with commercial substance. Assuming a trade-in allowance of $5,000, the cost basis of the new asset is
a.
$54,000
b.
$59,500
c.
$60,000
d.
$60,500
2. A fixed asset with a cost of $41,000 and accumulated depreciation of $36,000 traded for a similar asset priced at $50,000. Assuming a trade-in allowance of $4,000, the cost basis of the new asset is
a.
$54,000
b.
$45,000
c.
$51,000
d.
$50,000
3. A fixed asset with a cost of $41,000 and accumulated depreciation of $36,500 traded for a similar asset priced at $60,000. Assuming a trade-in allowance of $3,000, the recognized loss on the trade is
a.
$3,000
b.
$4,500
c.
$ 500
d.
$1,500
4. A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 sold for $3,500. What is the amount of the gain or loss on disposal of the fixed asset?
a.
$2,000 loss
b.
$1,500 loss
c.
$3,500 gain
d.
$2,000 gain
5. The Petro Company acquired new machinery with a price of $15,200 by trading in similar old machinery and paying $12,700. The old machinery originally cost $9,000 and, accumulated depreciation of $5,000. In recording this transaction, PetroCompany should record
a.
the new machinery at $16,700
b.
the new machinery at $12,700
c.
a gain of $1,500
d.
a loss of $1,500
6. When a company discards machinery that fully depreciated, this transaction recorded with the following entry
a.
debit Accumulated Depreciation; credit Machinery
b.
debit Machinery; credit Accumulated Depreciation
c.
debit Cash; credit Accumulated Depreciation
d.
debit Depreciation Expense; credit Accumulated Depreciation
7. When a company sells machinery at a price equal to its book value, this transaction recorded with an entry that would include the following:
a.
debit Cash and Accumulated Depreciation; credit Machinery
b.
debit Machinery; credit Cash and Accumulated Depreciation
c.
debit Cash and Machinery; credit Accumulated Depreciation
d.
debit Cash and Depreciation Expense; credit Accumulated Depreciation
8. When a company exchanges machinery and receives a trade-in allowance greater than the book value, this transaction recorded with the following entry (assuming the exchange considered to have commercial substance):
a.
debit Machinery and Accumulated Depreciation; credit Machinery, Cash, and Gain on Disposal
b.
debit Machinery and Accumulated Depreciation; credit Machinery and Cash
c.
debit Cash and Machinery; credit Accumulated Depreciation
d.
debit Cash and Machinery; credit Accumulated Depreciation and Machinery
9. When a company exchanges machinery and receives a trade-in allowance less than the book value, this transaction recorded with the following entry:
a.
debit Machinery and Accumulated Depreciation; credit Machinery and Cash
b.
debit Cash and Machinery; credit Accumulated Depreciation
c.
debit Cash and Machinery; credit Accumulated Depreciation and Machinery
d.
debit Machinery, Accumulated Depreciation, and Loss on Disposal; credit Machinery and Cash
10. On December 31, Tetrica Company has decided to discard one of its equipment. The initial cost of the equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation taken up to the end of the year. The following will be included in the entry to record the disposal.
a.
Accumulated Depreciation Dr. $215,000
b.
Loss on Disposal of Asset Dr. $185,000
c.
Equipment Cr. $215,000
d.
Gain on Disposal of Asset Cr. $30,000
11. On January 1, Loco Company has decided to sell one of its machines. The initial cost of the machines was $215,000 with an accumulated depreciation of $185,000. Depreciation taken up to the end of the year. The company found a company that is willing to buy the equipment for $30,000. What is the amount of the gain or loss on this transaction?
a.
Gain of $30,000
b.
Loss of $30,000
c.
No gain or loss
d.
Cannot be determined
12. On January 1, Manteca Company has decided to sell one of its batting cages. The initial cost of the equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation taken up to the end of the year. The company found a company that is willing to buy the equipment for $20,000. What is the amount of the gain or loss on this transaction?
a.
Gain of $20,000
b.
Loss of $10,000
c.
No gain or loss
d.
Cannot be determined
13. On December 31, Fulana Company has decided to sell one of its specialized Trucks. The initial cost of the trucks was $215,000 with an accumulated depreciation of $185,000. Depreciation taken up to the end of the year. The company found a company that is willing to buy the equipment for $55,000. What is the amount of the gain or loss on this transaction?
a.
Cannot be determined
b.
No gain or loss
c.
Gain of $25,000
d.
Gain of $55,000
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