Question :
81. Which of the following correct when recording the disposal of : 1228536
81. Which of the following is correct when recording the disposal of equipment for a gain?
A. A debit to a gain account.
B. A credit to the equipment account for the asset’s book value.
C. A debit to accumulated depreciation for the depreciation accumulated to the date of disposal.
D. A decrease in total assets occurs.
82. Which of the following statements is incorrect with respect to the sale of a depreciable asset?
A. A gain occurs when the selling price exceeds book value.
B. A sale for a gain results in an increase in total assets.
C. A sale for a loss results in an increase in total assets.
D. A loss occurs when the selling price is less than book value.
83. Carter Company disposed of an asset at the end of the eighth year of its estimated life for $10,000 cash. The asset’s life was originally estimated to be 10 years. The original cost was $50,000 with an estimated residual value of $5,000. The asset was being depreciated using the straight-line method. What was the gain or loss on the disposal?
A. $1,000 loss
B. $4,000 loss
C. $5,500 gain
D. $10,000 gain
84. Which of the following journal entries is correct when a depreciable asset (building) is sold for cash subsequent to acquisition?
A.
B.
C.
D.
85. Which of the following statements is incorrect with respect to the sale of a depreciable asset for a loss?
A. Net income deceases and total assets decrease.
B. Net income and stockholders’ equity both decrease.
C. Total assets and stockholders’ equity both decrease.
D. Total assets increase and stockholders’ equity decreases.
86. Amanda Company purchased a computer that cost $10,000. It had an estimated useful life of five years and a residual value of $1,000. The computer was depreciated by the straight-line method and was sold at the end of the third year of use for $5,000 cash. How much of a gain or loss should Amanda record?
A. A gain of $1,000.
B. A loss of $5,000.
C. A gain of $400.
D. A loss of $400.
87. Amanda Company purchased a computer that cost $10,000. It had an estimated useful life of five years and a residual value of $1,000. The computer was depreciated by the straight-line method and was sold at the end of the third year of use for $5,000 cash. Which of the following statements correctly describes the computer sale?
A. Assets and stockholders’ equity both increase by $5,000.
B. Assets decrease $5,000 and stockholders’ equity is not affected.
C. Assets and stockholders’ equity both decrease by $400.
D. Assets and stockholders’ equity both increase by $400.
88. On March 1, 2010, Anniston Company purchased an oil well at a cost of $1,000,000. It is estimated that 150,000 barrels of oil can be produced over the remaining life of the well and the residual value of the well will be $100,000. During 2010, 15,000 barrels of oil were produced and sold. Which of the following statements is incorrect with respect to the accounting for the oil well?
A. The 2010 cost of goods sold was $90,000.
B. The book value of the oil well decreased $90,000 during 2010.
C. The inventory of oil increased $90,000 during 2010.
D. The depletion rate is $6.00 per barrel of oil.
89. On March 1, 2010, Anniston Company purchased an oil well at a cost of $1,000,000. It is estimated that 150,000 barrels of oil can be produced over the remaining life of the well and the residual value of the well will be $100,000. During 2010, 15,000 barrels of oil were produced and 10,000 barrels were sold. Which of the following statements is correct with respect to the accounting for the oil well?
A. The 2010 cost of goods sold was $90,000.
B. The book value of the oil well decreased $60,000 during 2010.
C. The inventory of oil increased $30,000 during 2010.
D. The 2010 cost of goods sold was $30,000.
90. During 2010, a company purchased a mine at a cost of $3,000,000. The company spent an additional $600,000 getting the mine ready for its intended use. It is estimated that 300,000 tons of mineral can be removed from the mine and the residual value of the mine will be $600,000. During 2010, 45,000 tons of mineral were removed from the mine and 35,000 tons were sold. Which of the following statements is correct with respect to the accounting for the mine?
A. The 2010 net income decreased $450,000 as a result of the mining during the year.
B. The book value of the mine decreased $350,000 during 2010.
C. The inventory of minerals increased $450,000 during 2010.
D. The 2010 cost of goods sold was $350,000.
