Question

and its related accum e d There between the b T - oros in the cost of the wished on its book value When the market or replacement value of an assis content below the book value 4. The her the rate of freed assets to long term b ies, the greater the margin of safety for the shareholder All of the following below are needed for the calculation of depreciation except residual value estimated life a book value 47. The most widely used depreciation method is a straight-line method b. sum-of-year-digits method declining balance method d unit of production method 48. When a company disposes machinery that is fully depreciated, the transaction would be recorded with the following entries a debit accumulated depreciation, credit the Machinery account. b. debit Machinery account and credit accumulated depreciation account c. debit cash, and machinery account, credit accumulated account d. debit cash, fully depreciated account and credit Machinery account. e no entry is required. 49. When a company sells machinery at price that is equal to its book value, the required journal entries should be: a. Debit machinery, Accumulated Depreciation; and credit cash b. Debit Cash and accumulated depreciation; and credit Machinery c. Debit Accumulated Depreciation; Credit Machinery d. None of the above. 50. T, E.Fixed assets must be reported in the Assets section of the Balance Sheet with their related Accumulated Depreciation amounts.

Answer 1

Answer to Q#42 (First question in the list): TRUE Reason: In accounting records, assets are recorded at cost, which includes purchase price of the asset paid, installation charges paid, if any, freight and carriage charges paid for bringing asset to the spot, etc. As the asset's production efficiency is declined period-by-period due to its usage, firm must charge depreciation on the assets for the respective reporting period by debiting such depreciation expense to income statement and creding a contra asset account called "Accumulated depreciation" As at any particular date, asset's carrying value will be equal to cost of the asset recorded reduced by balance in accumulated depreciation account. Carrying value of an asset is the book value of the asset as at any particular date. In other words, cost of the asset remains after deducting accumulated depreciation till date is called as book value of the asset. Therefore, given statement is true.