Question Details

The net book value of an asset will equal its fair market value 



1.	If a fully amortized capital asset is still used by a company, the
		a.	estimated remaining useful life must be revised to calculate the correct revised amortization.
		b.	asset is removed from the books.
		c.	accumulated amortization account is removed from the books but the asset account remains.
		d.	asset and the accumulated amortization continue to be reported on the balance sheet without adjustment until the asset is retired.

	2.	Which of the following statements is not true when a fully amortized capital asset is retired?
		a.	The capital asset's book value is equal to its estimated residual value.
		b.	The accumulated amortization account is debited.
		c.	The asset account is credited.
		d.	The capital asset's original cost equals its book value.

	3.	If a capital asset is retired before it is fully amortized, and no residual or scrap value is received,
		a.	a gain on disposal will be recorded.
		b.	phantom amortization must be taken as though the asset were still on the books.
		c.	a loss on disposal will be recorded.
		d.	no gain or loss on disposal will be recorded.

4.	The net book value of an asset will equal its fair market value at the date of sale if
		a.	a gain on disposal is recorded.
		b.	no gain or loss on disposal is recorded.
		c.	the capital asset is fully amortized.
		d.	a loss on disposal is recorded.

	5.	A truck costing $35,000 was destroyed when its engine caught fire. At the date of the fire, the accumulated amortization on the truck was $16,000. An insurance cheque for $40,000 was received based on the replacement cost of the truck. The entry to record the insurance proceeds and the disposition of the truck will include a
		a.	Gain on Disposal of $5,000.
		b.	credit to the Truck account of $19,000.
		c.	credit to the Accumulated Amortization account for $16,000.
		d.	Gain on Disposal of $21,000.





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