Question : 1) A loss sale of an asset occurs when the : 1212458

 

 

1) A loss on sale of an asset occurs when the book value is greater than the cash received.

2) When there is an exchange of assets, and no cash is paid, there will always be a gain or loss on disposal of property, plant, and equipment recorded.

 

3) When similar assets are exchanged and no cash is received or given up, there is no entry needed.

 

4) When similar assets are exchanged and no cash is received or given up, this indicates that the fair value of each of the assets is equal.

 

5) One way of safeguarding property, plant, and equipment assets is to carry adequate casualty insurance.

 

6) In an exchange transaction commercial substance exists when the cash flows of from the new asset received are similar in risk, timing and amount to the asset being exchanged.

 

7) A loss is recorded on the disposal of property, plant and equipment when:

A) an asset is sold for a price greater than the asset’s book value.

B) the asset’s residual value is less than the cash received.

C) the asset’s book value is greater than the amount of cash received from the sale.

D) the asset’s amortizable cost is greater than the cash received.

8) June Company Ltd. recently sold some used furniture for $3,800 cash. The furniture cost $19,600 and had accumulated amortization through the date of sale totalling $17,300. The journal entry to record the sale of the furniture is:

A)

Cash

3,800

 

Accum. Amort.-Furniture

17,300

 

        Furniture

 

19,600

        Gain on Sale of Furniture

 

1,500

 

B)

Cash

3,800

 

         Furniture

 

3,800

 

C)

Cash

3,800

 

         Gain on Sale of Furniture

 

3,800

 

D)

Cash

3,800

 

Accum. Amort.-Furniture

15,800

 

        Furniture

 

19,600

 

 

9) Global Enterprises Inc. sold some fully amortized equipment for $2,700 cash. The equipment had been purchased for $26,500 and Global had an estimated useful life at eight years and residual value at $3,500. The journal entry to record the sale of the equipment is:

A)

Cash

2,700

 

          Equipment

 

2,700

 

B)

Cash

2,700

 

Accum. Amort.-Equipment     

23,000

 

Loss on Sale of Equipment

800

 

          Equipment

 

26,500

 

C)

Cash

2,700

 

Loss on Sale of Equipment

800

 

          Equipment

 

3,500

 

D)

Cash

2,700

 

Accum. Amort.-Equipment     

23,800

 

          Equipment

 

26,500

 

10) Starmount Company Ltd. sold an old copy machine for $3,200. The old copy machine cost $9,000 and had accumulated amortization totalling $6,500. The entry to record the sale is:

A)

Cash

3,200

 

Accum. Amort.-Office Equip.

6,500

 

          Office Equipment

 

9,000

          Gain on Sale of Office Equip.

 

700

 

B)

Cash

3,200

 

Loss on Sale of Office Equip.

5,800

 

          Office Equipment

 

9,000

 

C)

Cash

3,200

 

Accum. Amort.-Office Equip.

6,500

 

          Office Equipment

 

9,700

 

D)

Cash

3,200

 

Loss on Sale of Office Equip.

3,300

 

          Office Equipment

 

6,500