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ACG 2021 Exam 4 Practice Questions and Correct Answers
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Capital Lease Lessees show the asset and liability on the balance sheet. Depreciable Cost Cost - Salvage Value Annual Deprecation Expense: Straight Line (Cost - Salvage Value)/Useful Life Annual Deprecation Expense: Double-Declining Current Year Value * (2 * (1/Expected Useful Life)) What will ...

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  • August 11, 2024
  • 4
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • acg 2021 exam 4 practice questions and correct ans
  • capital lease lessees show the asset and liabilit
  • depreciable cost cost salvage value

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  • ACG 2021
  • ACG 2021

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ACG 2021 Exam 4 Practice Questions
and Correct Answers
Capital Lease ✅Lessees show the asset and liability on the balance sheet.

Depreciable Cost ✅Cost - Salvage Value

Annual Deprecation Expense: Straight Line ✅(Cost - Salvage Value)/Useful Life

Annual Deprecation Expense: Double-Declining ✅Current Year Value * (2 *
(1/Expected Useful Life))

What will maximize depreciation expense in the first year of owning an asset? ✅A
short estimated life, a low salvage value, and declining balance depreciation

Book Value ✅Cost - Accumulated Depreciation

When there is a change in a depreciable asset's useful life or salvage value ✅Only that
asset's current and future years' depreciation will be affected

When equipment is sold for cash in an amount that is greater than its book value, the
company debits the following ✅(i) Accumulated Depreciation and (ii) Cash

When equipment is sold for cash in an amount that is less than its book value, the
company debits the following ✅(i) Accumulated Depreciation, (ii) Cash, and (iii) Loss
on Disposal of Plant Assets

Asset Turnover Ratio ✅Net Sales/Average Total Assets

Return On Assets ✅Net Income/Average Total Assets

Profit Margin Ratio * Asset Turnover Ratio

Profit Margin Ratio ✅Net Income/Net Sales

Amortization Expense ✅(purchase price/shorter life)*(months left in year/12)

What is false regarding the declining-balance method of depreciation? ✅The declining-
balance method produces lower depreciation expense in the early years as opposed to
the later years.

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