Question :
101. Which of the following statements true regarding the amortization : 1255958
101. Which of the following statements is true regarding the amortization of intangible assets?
a. The expected residual value of most intangible assets is zero.
b. The service life of an intangible asset is always equal to its legal life.
c. Intangible assets with a limited useful life are not amortized.
d. In recording amortization, an accumulated amortization account is always used.
102. Bricktown Exchange purchases a copyright for $50,000. The copyright has a remaining legal life of 25 years, but only an expected useful life of five years with no residual value. Assuming the company uses the straight-line method, what is the amortization expense for the first year?
a.
$0.
b.
$2,000.
c.
$3,333.
d.
$10,000.
103. Berry Co. purchases a patent on January 1, 2015, for $40,000 and the patent has an expected useful life of five years with no residual value. Assuming Berry Co. uses the straight-line method, what is the amortization expense for the year ended December 31, 2016?
a.
$0.
b.
$8,000.
c.
$16,000.
d.
$40,000.
104. Berry Co. purchases a patent on January 1, 2015, for $40,000 and the patent has an expected useful life of five years with no residual value. Assuming Berry Co. uses the straight-line method, what is the carrying value of the patent on December 31, 2016?
a.
$21,000.
b.
$33,000.
c.
$24,000.
d.
$26,000.
105. Gains on the sale of fixed assets for cash:
a.Are the excess of the book value over the cash received.
b.Are recorded as a debit.
c.Are reported on a net-of-tax basis if material.
d.Are the excess of the cash received over the book value.
106. Abbott Company purchased a computer that cost $10,000. It had an estimated useful life of 5 years and no residual value. The computer was depreciated by the straight-line method and was sold at the end of the fourth year of use for $3,000 cash. Abbott should record:
a.
a gain of $1,000.
b.
a loss of $1,000.
c.
neither a gain nor a loss – the computer was sold at its book value.
d.
neither a gain nor a loss – the gain that occurred in this case would not be recognized.
107. On January 1, 2013, Jacob Inc. purchased a commercial truck for $48,000 and uses the straight-line depreciation method. The truck has a useful life of eight years and an estimated residual value of $8,000. On December 31, 2015, Jacob Inc. sold the truck for $30,000. What amount of gain or loss should Jacob Inc. record on December 31, 2015?
a.
Gain, $22,000.
b.
Loss, $18,000.
c.
Gain, $5,000.
d.
Loss, $3,000.
108. Alliance Products purchased equipment that cost $120,000. It had an estimated useful life of four years and no residual value. The equipment was depreciated by the straight-line method and was sold at the end of the third year of use for $25,000 cash. Abbott should record:
a.
A gain of $5,000.
b.
A loss of $5,000.
c.
Neither a gain nor a loss since the computer was sold at its book value.
d.
Neither a gain nor a loss since the gain would not be recognized.
109. Career Services, Incorporated sold some office equipment for $52,000 on December 31, 2015. The journal entry to record the sale would include which of the following if the original cost of the equipment was $80,000 with a residual value of $5,000 and a useful life of 10 years? Assume the machine was purchased on January 1, 2012 and depreciated using the straight-line method.
a.
Gain of $2,000.
b.
Loss of $9,500.
c.
Gain of $9,500.
d.
Loss of $2,000.
110. ABO purchased a truck at the beginning of 2015 for $140,000. They sold the truck at the end of 2016 for $95,000. If the expected useful life of the truck was six years with a residual value of $20,000 and ABO uses straight-line depreciation, which of the following is true regarding the entry to record the sale of the truck?
a.
Credit Gain $5,000.
b.
Debit Loss $5,000.
c.
Credit Accumulated Depreciation $40,000.
d.
Credit Equipment $100,000.
