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##### Accounting CHAPTER 8 PRACTICE QUIZ SOLUTION

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Question;1.Adams Company purchased a tract of land, an office building, and some manufacturingequipment for \$775,000. The appraised value of the land, building, and equipment were\$373,100, \$427,700, and \$109,200, respectively. What was the debit to the Building account torecord the purchase?A.\$427,700B.\$303,333C.\$258,333D.\$364,250Table 8-1On January 1, 2012, Lunsford Equipment Company purchased a new computerized security system for\$130,000. It expects to use the system for 5 years, after which it can be sold for \$6,500.2.Refer to Table 8-1. What is the book value of the equipment on December 31, 2012, if Lunsforduses the straight-line method of depreciation?A.\$ 49,400B.\$ 74,100C.\$ 80,600D.\$105,3003.Refer to Table 8-1. If Lunsford uses the double-declining-balance method of depreciation, whatis depreciation expense for 2012?A.\$31,200B.\$29,640C.\$83,200D.\$52,0004.Refer to Table 8-1. Lunsford uses the straight-line method of depreciation and sells theequipment for \$30,000 at the end of the four years. The journal entry to record the sale willinclude which of the following?A. \$31,200 credit to EquipmentB.\$ 5,300 credit to Gain on the Sale of EquipmentC.\$98,800 debit to Accumulated DepreciationD.\$ 1,200 credit to Loss on the Sale of Equipment5.Refer to Table 8-1. Assume that Lunsford uses straight-line depreciation. After recording twofull years of depreciation, they decide the system will last a total of six years, rather than five.Residual value at the end of six years will be \$8,000. What is 2014 depreciation expense?A.\$16,525B.\$18,150C.\$24,200D.\$20,150In 2012, Mountain Ore, Inc., paid \$8,250,000 for land with an estimated 600,000 tons of ore.Mountain Ore plans to sell the land for \$300,000 when all of the ore has been extracted. In 2012,24,000 tons of ore were mined and sold. What is depletion expense for the year?A.\$318,000B.\$330,000C.\$300,0006.D.\$325,0007.Speedy Deliveries Services owns and operates a fleet of delivery vehicles. Which of these is (are)considered to an ordinary repair by Speedy?A.Major engine overhaul.B.Replace dead battery.C.Add hydraulic lift to back of truck.D.Both B and C are ordinary repairs.8.Which of the following statements is FALSE?A.Land is never depreciated.B.An assets residual value and useful life must be estimated in order to computedepreciation.C.At the end of its useful life, the remaining book value of an asset will always equal its fairmarket value.D.The units-of-production method is most appropriate for an asset that wears out due tophysical use.9.Which of the following is (are) accounted for as intangible assets?A.Land improvementsB.GoodwillC.LandD.All of the above are intangible assets.10.Which of these is a TRUE statement?A.Straight-line depreciation is most often used for tax purposes.B.The units-of-production method results in lower depreciation and thereforehigher net income in the years when an asset is more productive.C.Double-declining balance depreciation results in the greatest amount ofdepreciation expense recorded over the assets life.D.DDB depreciation creates a cash advantage over straight-line because higheramounts of depreciation are deducted early in the life of an asset, allowing tax savings tobe invested.

Paper#38786 | Written in 18-Jul-2015

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