Capital Assets Quiz
What do you know about capital assets? It's an opportunity for you to test your knowledge with this capital assets quiz that we have brought for you. A capital asset can be defined as any kind of property that is held by an assets, whether that property is connected with their business or profession or if it's not connected with their business or profession. Here are some trivia questions that will help you know more about capital assets.
- 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.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
- 5.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
- 6.An accelerated depreciation method yields smaller depreciation expenses in the early years of an asset's life and larger charges in later years.
- A.
True
- B.
False
- 7.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
- 8.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.
- 9.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.
- 10.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.
- 11.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.
- 12.Creek Construction owned a bulldozer that 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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