ACCT 2100 Chapter 6 Quiz
NAME: ___Seth Johnson__________________ Quiz Questions for Chapter 6
**ANSWERS ARE HIGHLIGHTED
1. A truck was purchased for $25,000. It has a six-year life and a $4,000 salvage value. Using straight-line depreciation, what is the asset’s carrying value (book value) after 2 years?
d. $18,000.
2. The sale for $2,000 of equipment that cost $8,000 and has accumulated depreciation of $6,700 would result in what reflected in the income statement?
d. loss of $1,300.
The following information pertains to the next two questions. Z Company purchased an asset for $24,000 on January 1, 2011. The asset was expected to have a four-year life and a $4,000 salvage value.
3. The amount of depreciation expense for 2013 using double-declining-balance would be
c. $6,000.
4. Assume that Z Company uses straight-line depreciation. If, on January 1, 2014, Z Company sells the asset for $10,000, the statement of cash flows would report a
b. $10,000 cash inflow from an asset disposal in the investing activities section.
5. On January 1, 2012, Fulsom Corporation purchased a machine for $50,000. Fulsom paid shipping expenses of $500 as well as installation costs of $1,200. Fulsom estimated the machine would have a useful life of ten years and an estimated salvage value of $3,000. If Fulsom records depreciation using the straight-line method, depreciation expense for 2013 is
b. $5,170.
6. Hickory Ridge Company purchased land and a building for $920,000. The individual assets were appraised at the following market values:
Land $614,400
Building $345,600
Recording the land in the accounting records would
d. Both a and c.
7. XYZ Company paid cash for a capital expenditure that improved the operating efficiency of one of its assets. Which of the following reflects how this expenditure affects the company’s financial statements?
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
a.
+ −
NA
NA
**ANSWERS ARE HIGHLIGHTED
1. A truck was purchased for $25,000. It has a six-year life and a $4,000 salvage value. Using straight-line depreciation, what is the asset’s carrying value (book value) after 2 years?
d. $18,000.
2. The sale for $2,000 of equipment that cost $8,000 and has accumulated depreciation of $6,700 would result in what reflected in the income statement?
d. loss of $1,300.
The following information pertains to the next two questions. Z Company purchased an asset for $24,000 on January 1, 2011. The asset was expected to have a four-year life and a $4,000 salvage value.
3. The amount of depreciation expense for 2013 using double-declining-balance would be
c. $6,000.
4. Assume that Z Company uses straight-line depreciation. If, on January 1, 2014, Z Company sells the asset for $10,000, the statement of cash flows would report a
b. $10,000 cash inflow from an asset disposal in the investing activities section.
5. On January 1, 2012, Fulsom Corporation purchased a machine for $50,000. Fulsom paid shipping expenses of $500 as well as installation costs of $1,200. Fulsom estimated the machine would have a useful life of ten years and an estimated salvage value of $3,000. If Fulsom records depreciation using the straight-line method, depreciation expense for 2013 is
b. $5,170.
6. Hickory Ridge Company purchased land and a building for $920,000. The individual assets were appraised at the following market values:
Land $614,400
Building $345,600
Recording the land in the accounting records would
d. Both a and c.
7. XYZ Company paid cash for a capital expenditure that improved the operating efficiency of one of its assets. Which of the following reflects how this expenditure affects the company’s financial statements?
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
a.
+ −
NA
NA