Question

A firm has fixed assets at the end of 2015 of $5,000 and accumulated depreciation of $1,250. At the end of 2016, fixed assets are $5,100 and accumulated depreciation is $1,500. Which of the following statements MUST be true. a. The firm purchased exactly $100 in fixed assets during 2016, Net fixed assets increased over the year 2016. The net fixed assets at the end of 2015 were $6,250 The 2016 depreciation expense was $250 b.

Answer 1

Answer (True Statements)

1. The firm purchased exactly $100 in fixed asset during 2016

d.   The 2016 depreciation expenses was $250

Explanations

1. The firm purchased exactly $100 in fixed asset during 2016 – True

Fixed asset at the end of 2015 = $5,000

Fixed asset at the end of 2016 = $5,100

Therefore purchase of fixed assets in 2016 = $5,100 - $5,000

                                                                      = $100

2. Net Fixed assets increased over the year 2016 – False

Year	Gross Assets (1)	Depreciation (2)	Net Assets (1-2)
2015	$5,000	$1250	$3,750
2016	$5,100	$1500	$3,600

3. The net fixed asset at the end of 2015 were $6,250 – False

Net asset of 2015 is $3,750 (See the above table)

4. The 2016 depreciation expenses was $250 – True

Particular	Amount
Accumulated Depreciation at the end of 2016	$1,500
Accumulated Depreciation at the end of 2015	$1,250
Therefor depreciation expenses for 2016 ($1500 - $1,250)	$250