Question Details

The balance in the Accumulated Amortization account represents 


1.	Interest may be included in the acquisition cost of a capital asset
		a.	during the construction period of a self-constructed asset.
		b.	if the asset is purchased on credit.
		c.	if the asset acquisition is financed by a long-term note payable.
		d.	if it is a part of a lump-sum purchase.

	2.	The balance in the Accumulated Amortization account represents the
		a.	cash fund to be used to replace capital assets.
		b.	amount to be deducted from the cost of the capital asset to arrive at its fair market value.
		c.	amount charged to expense in the current period.
		d.	amount charged to expense since the acquisition of the capital asset.

	3.	Which one of the following items is not a consideration when recording periodic amortization expense on capital assets?
		a.	Residual value
		b.	Estimated useful life
		c.	Cash needed to replace the capital asset
		d.	Cost

	4.	Amortization is the process of allocating the cost of a capital asset (such as property, plant, and equipment) over its service life in a(n)
		a.	equal and equitable manner.
		b.	accelerated and accurate manner.
		c.	systematic and rational manner.
		d.	conservative market-based manner.

	5.	The net book value of an asset is equal to the
		a.	asset's market value less its historical cost.
		b.	asset- cost less amortization expense.
		c.	replacement cost of the asset.
		d.	asset's cost less accumulated amortization.




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