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108. Additions and improvements a. occur frequently during the ownership of a plant asset. b. normally involve immaterial expenditures. c. increase the book value of plant assets when incurred. d. typically only benefit the current accounting period. 109. A gain or loss on disposal of a plant asset is determined by comparing the a. replacement cost of the asset with the asset's original cost. b. book value of the asset with the asset's original cost. c. original cost of the asset with the proceeds received from its sale. d. book value of the asset with the proceeds received from its sale.

110. The book value of a plant asset is the difference between the a. replacement cost of the asset and its historical cost. b. cost of the asset and the amount of depreciation expense for the year. c. cost of the asset and the accumulated depreciation to date. d. proceeds received from the sale of the asset and its original cost.

111. If a plant asset is retired before it is fully depreciated, and the salvage value received is less than the asset's book value, a. a gain on disposal occurs. b. a loss on disposal occurs. c. there is no gain or loss on disposal. d. additional depreciation expense must be recorded.

112. A company sells a plant asset which originally cost $180,000 for $60,000 on December 31, 2002. The Accumulated Depreciation account had a balance of $72,000 after the current year's depreciation of $18,000 had been recorded. The company should recognize a a. $120,000 loss on disposal. b. $48,000 gain on disposal. c. $48,000 loss on disposal. d. $30,000 loss on disposal.

113. A company decides to exchange its old delivery truck and $8,000 for a new delivery truck. The old delivery truck had a book value of $15,000 and a fair market value of $12,000 at the time of the exchange. The acquisition cost of the new delivery truck will be equal to the cash paid plus the a. book value of the old delivery truck. b. original cost of the old delivery truck. c. fair market value of the old delivery truck. d. accumulated depreciation to date on the old delivery truck.

114. A company decides to exchange its old computer and $44,000 for a new computer. The old computer has a book value of $36,000 and a fair market value of $40,000 on the date of the exchange. The cost of the new computer would be recorded at a. $80,000. b. $84,000. c. $76,000. d. cannot be determined.

115. A company exchanges its old office equipment and $30,000 for similar new office equipment. The old office equipment has a book value of $21,000 and a fair market value of $15,000 on the date of the exchange. The cost of the new office equipment would be recorded at a. $51,000. b. $45,000. c. $36,000. d. cannot be determined.

116. When an old plant asset is exchanged for a similar new plant asset and a gain on disposal occurs, the gain is Recognized Immediately Deferred a. Yes Yes b. Yes No c. No Yes d. No No 117. When an old plant asset is exchanged for a similar new plant asset and a loss on disposal occurs, the loss is Recognized Immediately Deferred a. Yes No b. Yes Yes c. No No d. No Yes

118. If similar assets are exchanged, any difference between the fair market value and the book value of the old plant asset is a. recorded as a gain or loss. b. recorded if a gain but is deferred if a loss. c. recorded if a loss but is deferred if a gain. d. deferred if either a gain or loss.

119. If disposal of a plant asset occurs during the year, depreciation is a. not recorded for the year. b. recorded for the whole year. c. recorded for the fraction of the year to the date of the disposal. d. not recorded if the asset is scrapped.

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

121. Which of the following statements is not true when a fully depreciated plant asset is retired? a. The plant asset's book value is equal to its estimated salvage value. b. The accumulated depreciation account is debited. c. The asset account is credited. d. The plant asset's original cost equals its book value.

122. If a plant asset is retired before it is fully depreciated, and no salvage or scrap value is received, a. a gain on disposal will be recorded. b. phantom depreciation 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. 123. The 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 plant asset is fully depreciated. d. a loss on disposal is recorded.

124. A truck costing $66,000 was destroyed when its engine caught fire. At the date of the fire, the accumulated depreciation on the truck was $30,000. An insurance check for $75,000 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 $9,000. b. credit to the Truck account of $36,000. c. credit to the Accumulated Depreciation account for $30,000. d. Gain on Disposal of $39,000.

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