Question : Learning Objective 6-1 6.1-1) Depreciation ________. A) the loss in market value : 1253272

Learning Objective 6-1

6.1-1) Depreciation is ________.

A) the loss in market value of an asset

B) the allocation of a long-term asset’s cost to an expense account over the asset’s life

C) an increase in an asset’s value over time or usage

D) the revenue earned by a long-term asset over its useful life

6.1-2) When a company uses cash to purchase a machine, recording the purchase will ________.

A)   decrease shareholders’ equity

B)   increase expenses

C)   exchange one asset for another

D)   increase assets, depreciation expense, and liabilities

6.1-3) Which of the following is typically a long-term asset?

A) an intangible asset such as a patent or copyright

B) cash

C) common stock

D) depreciation expense

6.1-4) All of the following costs would be included in the Equipment account when equipment is purchased EXCEPT ________.

A) the initial invoice amount

B) costs to have the equipment delivered

C) costs incurred to install the equipment

D) costs to maintain the operating condition of the equipment

6.1-5) All of the following costs would be included in the Land account when land is purchased EXCEPT ________.

A) the costs associated with paving a parking lot on the land

B) the realtor’s fee

C) costs to prepare the land for use such as removing a tree stump

D) the fee paid to transfer title to the land

6.1-6) Cost is ________.

A)  only the amount of cash paid to buy an asset

B) the amount of an asset consumed during a period

C) the cash plus cash equivalent amount paid to buy an asset

D) the decreases in shareholders’ equity when an asset is purchased

6.1-7) Which statement below is true about the cost principle?

A) The cost principle says that all costs associated, directly or indirectly, with buying and using a long-term asset should be permanently capitalized.

B) The cost principle says that all costs reasonable and necessary to place an asset into a working condition should be capitalized.

C) The cost principle says that all costs associated with purchasing a long-term asset should be expensed in the period of the purchase.

D) The cost principle says that only the cash paid to acquire a long-term asset should be capitalized.

6.1-8) Which of the following expenditures should NOT be capitalized?

A) the costs of testing a new machine to get it ready for use

B) purchasing factory equipment with an estimated useful life of 7 years

C) purchasing a used truck with an estimated 40,000 miles of service life remaining

D) the costs of changing the oil in the company’s fleet of delivery trucks

6.1-9) Tango Company purchased land and a building for $350,000. If the assets had been purchased separately, the company would have paid $170,000 for the land and $210,000 for the building. What amount should be recorded for the building?

A) $210,000

B) $199,000

C) $193,421

D) $188,901

6.1-10) Tango Company purchased land and a building for $350,000. If the assets had been purchased separately, the company would have paid $170,000 for the land and $210,000 for the building. What amount should be recorded for the land?

A) $156,579

B) $169,405

C) $170,000

D) $187,321