Chapter 9 Tutorial Friday Nov 10, 2023

Tutorial Quiz
CHAPTER 9
REPORTING AND ANALYZING LONG-LIVED ASSETS

QUIZ #1

Circle the correct answer.

True/False
1. The cost of property, plant, and equipment includes True False
all expenditures that are necessary in order to acquire
the asset and make it ready for its intended use.

2. Interest cost incurred to finance construction of a True False

building is not included as part of the cost of the building.

3. The depreciable amount of an asset equals its cost True False

less residual value.

4. Under the diminishing-balance method of depreciation, True False

an asset may not be depreciated below its estimated
residual value.

5. Operating expenditures are capitalized within the True False

statement of financial position.

6. The cost of an addition is debited to the appropriate True False

asset account.

7. When the proceeds exceed the carrying amount of True False

a piece of equipment being sold, the excess is
debited to Loss on Disposal.

8. Fully depreciated assets continue to be reported True False

in the accounting records.

9. Only intangible assets with indefinite lives are True False

amortized.

10. Asset turnover is calculated by dividing average True False

total assets by net sales.

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Chapter 9 Tutorial Friday Nov 10, 2023

Question #2

1.Name three advantages of leasing an asset over purchasing the asset.

2. On October 1, 2024, Bartow Corporation purchased a delivery truck for $45,000. It is estimated that
the truck will be driven 320,000 km during a five-year period, after which it will be sold for $5,000. The
truck was driven 30,000 km in 2024. Calculate

(a) depreciation for 2024 using the straight-line method.

(b) depreciation for 2024 using the double-diminishing balance method.

(c) depreciation for 2025 using the double-diminishing balance method.

(d) depreciation for 2024 using the units-of-production method.

3. On April 30, 2027, Wilson Limited sold a used piece of manufacturing equipment for $6,500. The
equipment had been purchased on January 1, 2024 for $50,000. The equipment was estimated to have a
useful life of 4 years, with a residual value of $2,000. The equipment had been depreciated using the
straight-line method. Depreciation was last recorded for the year ended December 31, 2024.

(a) Calculate the carrying amount of the asset on December 31, 2026.

(b) Record the depreciation for 2027.

(c) Calculate the gain or loss on disposal.

(d) Record the sale of the equipment on April 30, 2027.

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Chapter 9 Tutorial Friday Nov 10, 2023