Question : 61.The following items represent common post acquisition expenditures incurred equipment. A. : 1253707

61.The following items represent common post acquisition expenditures incurred on equipment.

A.       An overhaul to increase useful life of the equipment

B.       Cost of a muffler to reduce equipment noise

C.     Lubrication service

D.     Costs of redesign to increase output

Identify which of these items are considered to be betterments.

                  A only

                  A, B, and D

                   A and D

                  A and B

62.The following items represent common postacquisition expenditures incurred on equipment.

   Replacement of defective parts

   Rewiring costs to increase operating speed

  Painting costs

  Repair of the major circuitry of the equipment

Identify which of these items are considered to be maintenance items.

                  A and C

                  C only

                   A, B, and C

                  A, C, and D

63.Rio Grande Company purchased equipment on January 1, 2010 for $75,000.  The estimated useful life of the equipment is 5 years, the salvage value is $10,000, and the company uses the double-declining balance method to depreciate fixed assets.  Which of the following journal entries would Rio Grande record if the equipment is scrapped after three years?

        Equipment ………..              75,000

Gain on Disposal of Equipment                             16,200

Accumulated Depreciation—Equipment                                                         58,800

       Accumulated Depreciation—Equipment                             58,800

Loss on Disposal of Equipment               16,200

Equipment ………..              75,000

        Accumulated Depreciation—Equipment                             58,800

Cash……….16,200

Equipment ………..              75,000

       Depreciation Expense….              58,800

Loss on Disposal of Equipment               16,200

Equipment ………..              75,000

64.Rio Grande Company purchased equipment on January 1, 2010 for $75,000.  The estimated useful life of the equipment is 5 years, the salvage value is $10,000, and the company uses the double-declining balance method to depreciate fixed assets.  How much depreciation would Rio Grande record for the fourth year of the equipment’s use?

     $6,480

     $6,200

      $5,616

     $6,000

65.Rio Grande Company purchased equipment on January 1, 2010 for $75,000.  The estimated useful life of the equipment is 5 years, the salvage value is $10,000, and the company uses the double-declining balance method to depreciate fixed assets.  Which of the following journal entries would Rio Grande record if the equipment is scrapped after five years?

        Equipment ………..              75,000

Gain on Disposal of Equipment                             10,000

Accumulated Depreciation—Equipment                                                         65,000

       Accumulated Depreciation—Equipment                             75,000

Equipment ………..              75,000

        Accumulated Depreciation—Equipment                             65,000

Loss on Disposal of Equipment              10,000

Equipment ………..              75,000

       Depreciation Expense….              65,000

Loss on Disposal of Equipment               10,000

Equipment ………..              75,000

66.Rio Grande Company purchased equipment on January 1, 2010 for $75,000.  The estimated useful life of the equipment is 5 years, the salvage value is $10,000, and the company uses the double-declining balance method to depreciate fixed assets.  Which of the following journal entries would Rio Grande record if the equipment is sold for $17,000 after three years?

        Equipment ………..              75,000

Loss on Disposal of Equipment 800

Cash …………..17,000

Accumulated Depreciation—Equipment                                                         58,800

       Cash……….17,000

Gain on Disposal of Equipment                             6,200

Equipment ………..              10,800

c.Cash………….              17,000

Depreciation Expense….              10,800

Loss on Disposal of Equipment               47,200

Equipment ………..              75,000

d.Cash ………….              17,000

Accumulated Depreciation—Equipment                             58,800

Equipment ………..              75,000

Gain on Sale of Fixed Assets               800

67.Rio Grande Company purchased equipment on January 1, 2009 for $75,000.  The estimated useful life of the equipment is 5 years, the salvage value is $10,000, and the company uses the double-declining balance method to depreciate fixed assets.  Which of the following would be included in the journal entry that Rio Grande would record at the end of the fifth year, if the equipment and $19,000 cash are traded for a dissimilar fixed asset with a FMV of $25,000?

        A credit to Fixed Assets for $25,000.

       A credit to Equipment for $10,000.

        A credit to Gain on Disposal of Equipment for $4,000.

       A debit to Loss on Disposal of Equipment for $4,000.