Question : 91.For depreciable property other than real estate, MACRS based upon: A. The : 1237685

 

 

91.For depreciable property other than real estate, MACRS is based upon:   

A. The declining-balance method.

 

B. The straight-line method.

 

C. A 10-year recovery period.

 

D. The depreciation method and recovery period used by the company in its financial statements.

 

 

 

 

92.Which of the following statements about MACRS is not correct?   

A. MACRS is the only accelerated depreciation method that may be used on newly acquired assets for federal income tax purposes.

 

B. The method permits “depreciating” the asset to a tax basis of $0 over a specified recovery period.

 

C. If a company uses MACRS in its income tax returns, it also must use MACRS in its financial statements.

 

D. Most businesses would benefit from using MACRS rather than straight-line depreciation in their income tax returns.

 

 

 

 

93.The gain or loss on the disposal of a depreciable asset reported in financial statements often differs from that reported for income tax purposes. The principal reason for the difference is:   

A. The cost of the asset is different for financial reporting and income tax purposes.

 

B. The sales price of the asset is different for financial reporting and income tax purposes.

 

C. Different depreciation methods have been used in financial statements and in income tax returns.

 

D. The company has made an error because the same amount of gain or loss should appear in the income tax return as in the financial statements.

 

 

 

 

94.For the financial statements of publicly traded companies, MACRS:   

A. Is recommended.

 

B. Is required.

 

C. Is optional.

 

D. Is not considered to be in conformity with GAAP.

 

 

 

 

95.An asset which costs $97,600 and has accumulated depreciation of $82,000 is sold for $18,000. What amount of gain or loss will be recognized when the asset is sold?   

A. A gain of $15,600.

 

B. A loss of $15,600.

 

C. A loss of $2,400.

 

D. A gain of $2,400.

($97,600 – $82,000) – $18,000 = $2,400 gain

 

 

 

96.An asset which costs $14,400 and has accumulated depreciation of $8,000 is sold for $5,600. What amount of gain or loss will be recognized when the asset is sold?   

A. A gain of $800.

 

B. A loss of $800.

 

C. A loss of $2,400.

 

D. A gain of $2,400.

($14,400 – $8,000) – $5,600 = $800 loss

 

 

 

97.An asset which costs $28,800 and has accumulated depreciation of $6,000 is sold for $21,600. What amount of gain or loss will be recognized when the asset is sold?   

A. A gain of $1,200.

 

B. A loss of $1,200.

 

C. A loss of $7,200.

 

D. A gain of $7,200.

($28,800 – $6,000) – $21,600 = $1,200 loss

 

 

 

98.An asset which costs $18,800 and has accumulated depreciation of $6,000 is sold for $11,600. What amount of gain or loss will be recognized when the asset is sold?   

A. A gain of $1,200.

 

B. A loss of $1,200.

 

C. A loss of $7,200.

 

D. A gain of $7,200.

($18,800 – $6,000) – $11,600 = $1,200 loss

 

 

 

99.When a depreciable asset is sold at a price equal to its book value, a journal entry would include:   

A. A credit to the asset account for its book value.

 

B. A debit to accumulated depreciation.

 

C. A credit to accumulated depreciation.

 

D. A credit to cash.

 

 

 

 

100.A gain is recognized on the disposal of plant assets when:   

A. The sales price is greater than the residual value but less than the book value.

 

B. The sales price is less than both the book value and the residual value.

 

C. The sales price is greater than the book value and greater than the residual value.

 

D. The sales price is greater than the book value and less than the residual value.