11) A loss on the sale of a plant asset is listed as:

A) a liability on the balance sheet.

B) an asset on the balance sheet.

C) other expense on the income statement.

D) other income on the income statement.

12) A gain on the sale of an asset occurs when:

A) the cash received is less than the book value of the asset.

B) the book value is equal to the cost of the asset, and the cash received is less than the cost of the asset.

C) the cash received is greater than the book value of the asset.

D) None of these answers is correct.

13) A loss on the sale of an asset would occur when:

A) the cash received is less than the book value of the asset.

B) the cash received is equal to the book value of the asset.

C) the cash received is greater than the book value of the asset.

D) None of these answers is correct.

14) The entry to record the disposal of a laptop computer with a cost of $2,500 and an accumulated depreciation of $1,500 would be:

A) debit Depreciation Expense $2,500; credit Equipment $2,500.

B) debit Accumulated Depreciation $1,500; debit Loss on Disposal of an Asset $1,000; credit Equipment $2,500.

C) debit Equipment $2,500; credit Accumulated Depreciation $2,500.

D) debit Cash $2,500; credit Equipment $2,500.

15) If an asset is exchanged for a similar asset, a gain results:

A) when the book value of the old asset is greater than what is received for the trade-in allowance.

B) when the book value of the old asset is less than what is received for the trade-in allowance.

C) when the accumulated depreciation equals the cost of the old asset.

D) None of these answers is correct.

16) When an asset is exchanged for a similar asset and a gain results, under accounting rules the gain is:

A) credited to Gain on Exchange of an Asset.

B) recorded in the other income section of the income statement.

C) absorbed into the cost of the new asset.

D) subtracted from the cost of the new asset.

17) Greetings Online disposed of a van that cost $22,000 with accumulated depreciation of $15,000. The journal entry would include a:

A) credit to Van $22,000.

B) debit to Accumulated Depreciation $15,000.

C) debit to Loss on Disposal of Plant Asset $7,000.

D) All of these answers are correct.

18) Myers Corporation exchanged an old machine costing $20,000, with an accumulated depreciation of $17,000, and trade-in value of $5,000 for a new machine cash price of $24,000. What is the journal entry?

A) Debit Machinery $22,000; debit Accumulated Depreciation $17,000; credit Machinery $20,000; credit Cash $19,000

B) Debit Machinery $19,000; debit Accumulated Depreciation $17,000; credit Gain on Disposal of Plant Asset $3,000; credit Machinery $20,000; credit Cash $19,000

C) Debit Machinery $24,000; debit Accumulated Depreciation $17,000; credit Machinery $20,000; credit Cash $19,000; credit Gain on Disposal $3,000

D) None of these answers is correct.

19) Corbin Corporation has a plant asset with a cost of $40,000 that is traded for a similar asset priced at $70,000. Assuming accumulated depreciation of $15,000 and a trade-in allowance of $10,000, what is the cost basis for the new asset?

A) $40,000.

B) $95,000.

C) $85,000.

D) $70,000.

20) A task station that originally cost $5,000 has no estimated salvage value and was depreciated at the rate of 20% per year (straight-line depreciation). At the end of the second year, it was sold for $2,500 cash. The transaction would result in a:

A) loss of $250.

B) gain of $250.

C) loss of $500.

D) gain of $500.

 

 



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