Question :
7) The entry to record the disposal of a laptop : 1177199
7) The entry to record the disposal of a laptop computer with a cost of $2,500 and an accumulated depreciation of $1,500 would be:
A) debit Depreciation Expense, $2,500; credit Equipment $2,500.
B) debit Accumulated Depreciation $1,500; debit Loss on Disposal of an Asset $1,000; credit Equipment $2,500.
C) debit Equipment $2,500; credit Accumulated Depreciation $2,500.
D) debit Cash $2,500; credit Equipment $2,500.
8) If an asset is exchanged for a similar asset, a loss results:
A) when the book value of the old asset is greater than what is received for the trade-in allowance.
B) when the book value of the old asset is less than what is received for the trade-in allowance.
C) when the accumulated depreciation equals the cost of the old asset.
D) None of these answers are correct.
9) When an asset is exchanged for a similar asset and a gain results, under accounting rules the gain is:
A) credited to Gain on Exchange of an Asset.
B) recorded in the other income section of the income statement.
C) absorbed into the cost of the new asset.
D) subtracted from the cost of the new asset.
10) Greetings Online disposed of a van that cost $22,000 with accumulated depreciation of $15,000. The journal entry would be to:
A) debit Accumulated Depreciation $15,000; credit Van $15,000.
B) debit Accumulated Depreciation $15,000; debit Depreciation Expense $7,000; credit Van $22,000.
C) debit Loss Disposal of Plant Asset $7,000; debit Accumulated Depreciation $15,000; credit Van $22,000.
D) None of these answers are correct.
11) Myers Corporation exchanged an old machine costing $20,000, with an accumulated depreciation of $17,000, and trade-in value of $5,000 for a new machine cash price of $24,000. What is the journal entry?
A) Debit Machinery $22,000; debit Accumulated Depreciation $17,000; credit Machinery $20,000; credit Cash $19,000
B) Debit Machinery $19,000; debit Accumulated Depreciation $17,000; credit Gain on Disposal of Plant Asset $3,000; credit Machinery $20,000; credit Cash $19,000
C) Debit Machinery $24,000; debit Accumulated Depreciation $17,000; credit Machinery $20,000; credit Cash $19,000; credit Gain on Disposal $3,000
D) None of these answers are correct.
12) Corbin Corporation has a plant asset with a cost of $30,000 that is traded for a similar asset priced at $60,000. Assuming accumulated depreciation of $25,000 and a trade-in allowance of $7,500, what is the cost basis for the new asset?
A) $47,500
B) $57,500
C) $50,000
D) $50,500
13) A task station that originally cost $2,500 has no estimated salvage value and was depreciated at the rate of 20% per year (straight-line depreciation). At the end of the third year, it was sold for $1,500 cash. The transaction would result in a:
A) loss of $250.
B) gain of $250.
C) loss of $500.
D) gain of $500.
14) A truck that cost $26,000 has been owned for 3 years and is traded for another truck for the same purpose. Total accumulated depreciation at the time of trade is $15,600. The trade-in value of the old truck is $12,000 and the new truck has a fair market value of $30,000, the new truck would be recorded at:
A) $10,400.
B) $12,000.
C) $29,400.
D) $28,400.
15) Equipment that originally cost $775 with no salvage value has accumulated depreciation of $700. The equipment is discarded. The transaction to record the discarding of the equipment would result in a:
A) loss of $75.
B) gain of $75.
C) loss of $700.
D) loss of $775.
16) If an asset is being sold or exchanged, the gain or loss is always computed by comparing the:
A) market value and cost.
B) book value and salvage value.
C) market value and salvage value.
D) market value and book value.
