13. Which of the following should be included in the acquisition cost of a piece

Question

13. Which of the following should be included in the acquisition cost of a piece of equipment?
a. transportation costs
b. installation costs
c. testing costs prior to placing the equipment into production
d. all are correct


14. Accumulated Depreciation
a. is used to show the amount of cost expiration of intangibles
b. is the same as Depreciation Expense
c. is a contra asset account
d. is used to show the amount of cost expiration of natural resources



15. A fixed asset's estimated value at the time it is to be retired from service is called
a. book value
b. residual value
c. market value
d. carrying value



16. Expected useful life is
a. calculated when the asset is sold.
b. estimated at the time that the asset is placed in service.
c. determined each year that the depreciation calculation is made.
d. none of the answers are correct.




17. The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called
a. depletion
b. deferral
c. Amortization
d. depreciation


18. All leases are classified as either
a. capital leases or long-term leases
b. capital leases or operating leases
c. operating leases or current leases
d. long-term leases or current leases



19. All of the following below are needed for the calculation of depreciation except
a. cost
b. residual value
c. estimated life
d. book value

Explanation / Answer

13. Which of the following should be included in the acquisition cost of a piece of equipment?
a. transportation costs
b. installation costs
c. testing costs prior to placing the equipment into production
d. all are correct (correct)
Explanation: Acquisition cost is the full cost incurred to bring a piece of equipment to a form and location suitable for its intended use, including all costs related to acquisition, delivery, and major installation costs.
The answer is "all are correct"

14. Accumulated Depreciation
a. is used to show the amount of cost expiration of intangibles
b. is the same as Depreciation Expense
c. is a contra asset account (correct)
d. is used to show the amount of cost expiration of natural resources

Explanation: Accumulated depreciation is all of the depreciation ever 'accumulated' against the assets currently in service. It is shown on the balance sheet as a 'contra' (negative) asset, directly below the assets it relates to.
15. A fixed asset's estimated value at the time it is to be retired from service is called
a. book value
b. residual value (correct)
c. market value
d. carrying value
16. Expected useful life is
a. calculated when the asset is sold.
b. estimated at the time that the asset is placed in service.
c. determined each year that the depreciation calculation is made. (correct)
d. none of the answers are correct.
17. The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called
a. depletion (correct)
b. deferral
c. Amortization
d. depreciation
18. All leases are classified as either
a. capital leases or long-term leases
b. capital leases or operating leases   (correct)
c. operating leases or current leases
d. long-term leases or current leases
19. All of the following below are needed for the calculation of depreciation except
a. cost
b. residual value
c. estimated life (correct)
d. book value
Explanation: Formula for depreciation is Cost-Residual Value divided by estimated life.
Explanation: Acquisition cost is the full cost incurred to bring a piece of equipment to a form and location suitable for its intended use, including all costs related to acquisition, delivery, and major installation costs.

14. Accumulated Depreciation
a. is used to show the amount of cost expiration of intangibles
b. is the same as Depreciation Expense
c. is a contra asset account (correct)
d. is used to show the amount of cost expiration of natural resources

Explanation: Accumulated depreciation is all of the depreciation ever 'accumulated' against the assets currently in service. It is shown on the balance sheet as a 'contra' (negative) asset, directly below the assets it relates to.
15. A fixed asset's estimated value at the time it is to be retired from service is called
a. book value
b. residual value (correct)
c. market value
d. carrying value
16. Expected useful life is
a. calculated when the asset is sold.
b. estimated at the time that the asset is placed in service.
c. determined each year that the depreciation calculation is made. (correct)
d. none of the answers are correct.
17. The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called
a. depletion (correct)
b. deferral
c. Amortization
d. depreciation
18. All leases are classified as either
a. capital leases or long-term leases
b. capital leases or operating leases   (correct)
c. operating leases or current leases
d. long-term leases or current leases
19. All of the following below are needed for the calculation of depreciation except
a. cost
b. residual value
c. estimated life (correct)
d. book value
Explanation: Formula for depreciation is Cost-Residual Value divided by estimated life.

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