Question Details

A gain or loss on disposal of a plant asset is determined by 



1.	IFRS allows companies to revalue plant assets to fair value. When an asset has increased in value, where is the account "Revaluation Surplus" reported?

	2.	Able Towing Company purchased a tow truck for $75,000 on January 1, 2010. It was originally depreciated on a straight-line basis over 10 years with an assumed residual value of $15,000. On December 31, 2012, before adjusting entries had been made, the company decided to change the remaining estimated life to 4 years (including 2012) and the residual value to $2,500. What was the depreciation expense for 2012?

	3.	Nicholson Company purchased equipment on January 1, 2010, for €20,000 with an estimated residual value of €5,000 and estimated useful life of 8 years. On January 1, 2012, Nicholson decided the equipment will last 12 years from the date of purchase. The residual value is still estimated at €5,000. Using the straight-line method the new annual depreciation will be:

4.	An asset was purchased for ¥150,000. It had an estimated residual value of ¥30,000 and an estimated useful life of 10 years. After 5 years of use, the estimated residual value is revised to ¥24,000 but the estimated useful life is unchanged. Assuming straight-line depreciation, depreciation expense in year 6 would be

5.	Equipment costing $60,000 with a residual value of $12,000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years. Assuming a revised estimated total life of 5 years and no change in the residual value, the depreciation expense for year 3 would be

6.	Ron's Quik Shop bought machinery for $25,000 on January 1, 2010. Ron estimated the useful life to be 5 years with no residual value, and the straight-line method of depreciation will be used. On January 1, 2011, Ron decides that the business will use the machinery for a total of 6 years. What is the revised depreciation expense for 2011?

7.	Each of the following is used in computing revised annual depreciation for a change in estimate except

8.	A change in the estimated useful life of equipment requires

	9.	Enos Company has decided to change the estimate of the useful life of an asset that has been in service for 2 years. Which of the following statements describes the proper way to revise a useful life estimate?



10.	Don's Copy Shop bought equipment for $75,000 on January 1, 2010. Don estimated the useful life to be 3 years with no residual value, and the straight-line method of depreciation will be used. On January 1, 2011, Don decides that the business will use the equipment for 5 years. What is the revised depreciation expense for 2011?

11.	Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as

12.	Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally

	13.	Which of the following is not true of ordinary repairs?

	
	14.	Additions and improvements

15.	Mento,Inc. spent $3,000,000 during 2011 to repair and update its plant assets. Mento spent $1,200,000 to paint the building, $230,000 to place worn-out gears on motors, $640,000 to install special shelving that will increase operating efficiency in the plant, and $930,000 on new machinery. What amount of these costs would appear as assets on Mento, Inc.'s December 31, 2011 statement of financial position?

16.	Touch Tronix Company has a piece of manufacturing equipment that has become obsolete. On December 21, 2011, the company discards the equipment which has a historical cost of $500,000 and accumulated depreciation of $460,000. What is the net impact on the long-term assets of Touch Tronix Company on its December 31, 2011 statement of financial position?

17.	When a company sells an asset at a gain, which of the following is true?

18.	If a plant asset is retired before it is fully depreciated and no salvage value is received,

19.	A gain or loss on disposal of a plant asset is determined by comparing the


	20.	The book value of a plant asset is the difference between the






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