Question

A machine originally had an estimated service life of 5 years, and after 3 years, it was decided that the original estimate should have been for 10 years. The remaining cost to be depreciated should be allocated over the next

Multiple Choice

• 5 years

• 6 years

• 10 years

• 7 years

• 2 years

• Creek Construction owned a bulldozer which was destroyed by fire. The bulldozer originally cost $38,000. The accumulated depreciation recorded to the date of loss was $20,000. The proceeds from the insurance company were $20,000. Creek Construction should recognize

  Multiple Choice

• An expense of $2,000

• A loss of $38,000

• A loss of $2,000

• A gain of $2,000

• A gain of $20,000

• TB 09-35 SportsWorld purchased store equipment for $6...

  SportsWorld purchased store equipment for $65,000. The equipment has an estimated residual value of $6,000, with an estimated useful life of 10 years. The annual depreciation using the straight-line method will be $3,900 per year.

  True or False

  TrueFalse

• The cost of land can include

  Multiple Choice

• Costs of removing existing buildings

• All of these

• Real estate commissions

• Purchase price

• Back property taxes

• The gain or loss from disposal of property, plant and equipment is the difference between an asset's book value and the value received.

  True or False

  TrueFalse

• When originally purchased, a vehicle had cost $23,000, with an estimated residual value of $1,500, and an estimated useful life of 8 years. After 4 years of straight-line depreciation, the estimated useful life was revised from 8 to 6 years, but with zero residual value. The depreciation expense in year 5 should be

  Multiple Choice

• $2.687.50

• $6,125.00

• $5,543.75

• $2,856.25

• The cost principle requires that an asset be recorded at the cash or cash equivalent amount given in exchange.

  True or False

  TrueFalse

• $10,750.00

Answer 1

Answer to first question in the list: Option-(d): 7 years Reason: It is given that a machine originally had an estimated service life of 5 years, and after 3 years, it was decided that the original estimate should have been for 10 years. It means that there would have been 3 years expired out of 10 years of revised estimated economic life of the asset. As per revised economic life of the asset, its book value shall be depreciated over the unexpired or remaining economic life of the asset as per revised useful life. In other words, book value of the asset shall be depreciated over next 7 years out of 10 years as per revised useful life of the asset. So, option-(d): 7 years is the correct answer.