Showing posts with label Equipment. Show all posts
Showing posts with label Equipment. Show all posts

Saturday, October 10, 2020

A company purchased a computer that cost $10,000. It had an estimated useful life of five years and no residual value. The computer was depreciated by the straight-line method

A company purchased a computer that cost $10,000. It had an estimated useful life of five years and no residual value. The computer was depreciated by the straight-line method and was sold at the end of the second year of use for $5,000 cash. The company should record:



A) a loss of $1,000.

B) a gain of $1,000.

C) neither a gain nor a loss—the computer was sold at its book value.

D) neither a gain nor a loss—the gain that occurred in this case would not be recognized.


Answer: A


A company purchased a computer that cost $10,000. It had an estimated useful life of five years and no residual value. The computer was depreciated by the straight-line method and was sold at the end of the fourth year of use for $3,000 cash. The company should record:



A) a gain of $1,000.

B) a loss of $1,000.

C) neither a gain nor a loss—the computer was sold at its book value.

D) neither a gain nor a loss—the gain that occurred in this case would not be recognized.


Answer: A


Equipment was sold for $40,000. The equipment was originally purchased for $75,000. At the time of the sale, the equipment had accumulated depreciation of $50,000. Calculate the gain or loss to be recorded on the sale of equipment.



A) Gain of $10,000.

B) Loss of $15,000.

C) Loss of $35,000.

D) Gain of $15,000.


Answer: D

Equipment was sold for $50,000. The equipment was originally purchased for $85,000. At the time of the sale, the equipment had accumulated depreciation of $30,000

Equipment was sold for $50,000. The equipment was originally purchased for $85,000. At the time of the sale, the equipment had accumulated depreciation of $30,000. Calculate the gain or loss to be recorded on the sale of equipment.



A) Gain of $20,000.

B) Loss of $5,000.

C) Loss of $35,000.

D) Gain of $5,000.


Answer: B

When a company reports a loss on the sale of a depreciable asset, which of the following is always true?



A) The company sold the asset for less than accumulated depreciation.

B) The company sold the asset for less than fair value.

C) The company sold the asset for less than book value.

D) The company sold the asset before the useful life was over.


Answer: C


When a company reports a gain on the sale of a depreciable asset, which of the following is always true?



A) The company sold the asset for more than its fair value.

B) The company sold the asset for more than its book value.

C) The company sold the asset before its useful life was over.

D) The company sold the asset for more than it was worth.


Answer: B

Assuming a current ratio of 1.2 and an acid-test ratio of 0.80, how will the purchase of inventory with cash affect each ratio?

Assuming a current ratio of 1.2 and an acid-test ratio of 0.80, how will the purchase of inventory with cash affect each ratio? A) Increase ...