Question

please help with these accounting questions!

Styles Styles Pane Sens A I U 1. The Accumulated Depreciation account represents a cash fund available to replace plant assets. A) True B) False 2. Using the units-of-activity method of depreciating factoryy equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had been used. A) True B) False 3. Additions and improvements to a plant asset that increase the asset's operating efficiency, productive capacity, or expected useful life are generally expensed in the period incurred. A) True B) False 4. If the proceeds from the sale of a plant asset exceed its book value, a gain on disposal осcurs. A) True B) False S. Franchises are classified as a plant asset A) True B) False 6. A company purchased land for $94,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Proceeds from salvage of the demolished building was $1,200. Under the historical cost principle, the cost of land would be recorded at A) $104,800. B) $94,000. C) $99,800. D) $106,000. English (United States) Focus 1252 words l

Answer 1

1.

It is false that the accumulated depreciation account represents a cash fund available to replace plant assets because the sinking fund is created for this purpose.

2.

It is false that the units-of-activity method of depreciating factory equipment will result in more depreciation than the straight-line method over the life of the asset. The amount of depreciation expense may vary but the total depreciation over the life of the asset will remain the same.

3.

False, if an expense increases the useful life of asset it will be capitalized and it cannot be expensed in the period it’s incurred but was added to the cost of the asset.

4.

True, it is true that if proceeds from the sale of the asset are more than book value than there is a gain on disposal of the asset because sales are more than book value.

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