ACG 2021 Exam 4 Practice Questions and Correct Answers
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Course
ACG 2021
Institution
ACG 2021
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 ...
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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