Question :
41. Expenditures that increase the expected useful life or productivity of : 1224941
41. Expenditures that increase the expected useful life or productivity of the asset are:
A. committed expenditures.
B. revenue expenditures.
C. current expenditures.
D. capital expenditures.
42. A capital expenditure results in a debit to:
A. an expense account.
B. a stockholders’ equity account.
C. a liability account.
D. an asset account.
43. Which of the following is an example of a capital expenditure?
A. Cleaning the carpet in the front room
B. Tune-up for a company truck
C. Replacing an engine in a company car
D. Replacing all burned-out light bulbs in the factory
44. On January 1, 2011, James Company sold a machine for $10,000 that it had used for several years. The machine was purchased at $22,000, and had accumulated depreciation of $9,000 at the time of sale. What gain or loss will be reported on the income statement for the sale of the machine?
A. Gain of $10,000
B. Loss of $13,000
C. Loss of $3,000
D. Gain of $3,000
45. On January 1, 2011, XYZ Corporation sold a piece of equipment for $30,000 which it had used for several years. The equipment had cost $45,000, and its accumulated depreciation amounted to $20,000 at the time of the sale. What are the net effects on the accounting equation of selling the equipment?
A. Assets and equity increase $30,000
B. Assets decrease and equity increases $5,000.
C. Assets and equity increase $5,000.
D. Assets and equity decrease $5,000.
46. Arnold, Inc. purchased a truck on January 1, 2009, for $40,000. The truck had an estimated life of 5 years and an estimated salvage value of $5,000. Arnold Inc. used the straight-line method to depreciate the asset. On July 1, 2012, the truck was sold for $7,000 cash. The journal entry to record the sale of the truck in 2012:
A. decreases equity.
B. increases total assets.
C. decreases total expenses.
D. increases net income.
47. Stricker Company sold equipment for $4,000. This resulted in a $1,500 loss. What is the impact of this sale on the balance sheet?
A. Reduces total assets
B. Increases total assets
C. Has no effect on total assets
D. Increases total assets and decreases total equity
48. Lighting Company sold an old machine on December 31, 2011, for $22,000 cash. The following data was available when the truck sold:
Acquisition cost
$100,000
Estimated salvage value at time of acquisition
8,000
Accumulated depreciation on December 31, 2011, after adjustment
85,000
When this transaction is recorded, it should include:
A. debit of $7,000 to the loss on disposal account.
B. credit of $22,000 to the truck account.
C. credit of $7,000 to the gain on disposal account.
D. credit of $15,000 to the gain on disposal account.
49. On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $250,000 with an accumulated depreciation of $210,000. Depreciation has been taken up to the end of the year. Strike found a company that is willing to buy the equipment for $25,000. What is the amount of the gain or loss on this transaction?
A. Gain of $25,000
B. Loss of $15,000
C. Loss of $25,000
D. Cannot be determined
50. On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. Strike found a company that is willing to buy the equipment for $55,000. What is the amount of the gain or loss on this transaction?
A. Cannot be determined
B. No gain or loss
C. Gain of $25,000
D. Gain of $55,000
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