Capital Assets Quiz: Trivia Questions!
16 Questions
| Total Attempts: 610
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Questions and Answers
- 1.Revenue expenditures are expenditures to keep assets in normal operating conditions.
- A.
True
- B.
False
- 2.Capital expenditures are also called balance sheet expenditures.
- A.
True
- B.
False
- 3.SportsWorld spent $17,000 to remodel its store. This cost will be recognized with a debit to Store Building.
- A.
True
- B.
False
- 4.Depreciation measures the decline in the market value of an asset.
- A.
True
- B.
False
- 5.Depreciation should always be recorded as soon as an asset is purchased.
- A.
True
- B.
False
- 6.Financial accounting and tax accounting require the same recordkeeping; therefore, there should be no difference in results between the two accounting systems.
- A.
True
- B.
False
- 7.The Income Tax Act generally requires that companies use a declining-balance method of cost allocation called Capital Cost Allowance to determine the maximum amount of deduction for a taxation year.
- A.
True
- B.
False
- 8.The units of the production method of depreciation charge a varying amount of expense for each period of an asset's useful life depending on its usage.
- A.
True
- B.
False
- 9.An accelerated depreciation method yields smaller depreciation expense in the early years of an asset's life and larger charges in later years.
- A.
True
- B.
False
- 10.Equipment costing $14,000 with accumulated depreciation of $10,000 was sold for $3,000. The company should recognize a $1,000 loss on the disposal of the equipment.
- A.
True
- B.
False
- 11.Goodwill is not depreciated or amortized but is instead decreased only if its value has been determined by management to be impaired.
- A.
True
- B.
False
- 12.The straight-line method and the declining-balance method of depreciation.
- A.
Produce the same total depreciation over an asset's useful life.
- B.
Allocate an asset's cost in a systematic and rational manner
- C.
Do not produce the same book value each year
- D.
Are both acceptable for GAAP.
- E.
All of these answers are correct
- 13.SportsWorld purchased a machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. SportsWorld estimates that the machine could produce 750,000 units of product over its useful life. In the first year, 95,000 units were produced. In the second year, production increased to 111,000 units. Using the units-of-production method, what is the amount of depreciation that should be recorded for the second year?
- A.
$18,000.
- B.
$22,800.
- C.
$26,640.
- D.
$36,000.
- E.
$49,440.
- 14.Sports world purchased equipment costing $10,000. The equipment has a residual value of $1,000, and an estimated useful life of 5 years or 36,000 shoes. The actual units produced during the year were 7,000 units. Calculate annual amortization using the straight-line method.
- A.
$1,800.
- B.
$4,000.
- C.
$1,450
- D.
$2,000.
- E.
$1,750.
- 15.When originally purchased, a vehicle had cost $23,000, with an estimated residual value of $1,500, and an estimated useful life of 8 years. After 4 years of straight-line depreciation, the estimated useful life was revised from 8 to 6 years. The depreciation expense in year 5 should be:
- A.
$5,375.00.
- B.
$2.687.50.
- C.
$5,543.75.
- D.
$10,750.00.
- E.
$2,856.25.
- 16.Creek Construction owned a bulldozer which was destroyed by fire. The bulldozer originally cost $38,000. The accumulated depreciation recorded to the date of loss was $20,000. The proceeds from the insurance company were $20,000. The creek should recognize:
- A.
A loss of $2,000.
- B.
A gain of $2,000.
- C.
A loss of $38,000.
- D.
A gain of $20,000.
- E.
An expense of $2,000.
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