ACCT CH 7
Krasel Corporation exchanges old equipment for new equipment. The original cost of the old equipment was $90,000,
and its accumulated depreciation at the date of exchange was $70,000. The new asset received had a fair value of
$50,000 and a book value of $45,000. The journal entry to record this exchange will include which of the following
entries?
a. Credit equipment $70,000
b. Credit equipment $90,000
c. Debit accumulated depreciation $70,000
d. Credit accumulated depreciation $70,000
e. Debit equipment $45,000
f. Debit equipment $50,000
g. Credit gain on exchange of asset $30,000
b,c,f,g
The journal entry to retire old equipment that is not fully depreciated includes a:
a. credit to equipment
b. debit to cash
c. debit to accumulated depreciation
d. debit to loss
e. credit to loss
a,c,d
Cheng Corporation exchanges old equipment for new equipment. The original cost of the old equipment was
$90,000, and its accumulated depreciation at the date of exchange was $40,000. The new equipment received had a
fair value of $40,000 and a book value of $35,000. The journal entry to record this exchange will include which of the
following entries?
a. Credit accumulated depreciation $40,000
b, Debit accumulated depreciation $40,000
c. Debit loss on exchange $10,000
d. Debit loss on equipment $15,000
e. Debit equipment $40,000
f. Credit equipment $90,000
g. Debit equipment $35,000
b,c,e,f
Pearce Corporation exchanges old equipment for new equipment. The original cost of the old equipment was
$120,000, and its accumulated depreciation at the date of exchange was $40,000. The new equipment received had
a fair value of $50,000 and a book value of $32,000. The journal entry to record this exchange will include which of
the following entries?
a. Debit equipment $32,000
b. Debit loss on exchange $30,000
c. Credit accumulated depreciation $40,000
d. Debit equipment $50,000
e. Debit accumulated depreciation $40,000
f. Credit equipment $120,000
, b,d,e,f
Which of the following items are intangible assets?
A. Trademarks
B. Buildings
C. Accounts receivable
D. Land
E. Goodwill
A,E
Which of the following are long-term tangible assets?
A. Property
B. Accounts receivable
C. Equipment
D. Trademark
E. Copyright
A,C
What is the first issue that needs to be addressed in order to properly report tangible and intangible assets?
A. Determining the amounts to be included in the assets' initial cost
B. How to record the disposal of the assets
C. The method for expensing the cost of the assets
D. How to recognize additional costs incurred during the assets' service life
A
True or false: The initial cost of property, plant, and equipment includes the purchase price and all expenditures
necessary to bring the asset to its desired condition and location for use.
TRUE
An asset that has no physical substance is referred to as a(n) _________ __________
intangible asset
Which of the following items are intangible assets?
A. Equipment
B. Land
C. Trademark
D. Copyright
E. Patent
C,D,E
Because the future benefits of research and development costs are uncertain, FASB requires that research and
development costs be treated as
A. an asset on the balance sheet.
B. a contra asset on the balance sheet.
Krasel Corporation exchanges old equipment for new equipment. The original cost of the old equipment was $90,000,
and its accumulated depreciation at the date of exchange was $70,000. The new asset received had a fair value of
$50,000 and a book value of $45,000. The journal entry to record this exchange will include which of the following
entries?
a. Credit equipment $70,000
b. Credit equipment $90,000
c. Debit accumulated depreciation $70,000
d. Credit accumulated depreciation $70,000
e. Debit equipment $45,000
f. Debit equipment $50,000
g. Credit gain on exchange of asset $30,000
b,c,f,g
The journal entry to retire old equipment that is not fully depreciated includes a:
a. credit to equipment
b. debit to cash
c. debit to accumulated depreciation
d. debit to loss
e. credit to loss
a,c,d
Cheng Corporation exchanges old equipment for new equipment. The original cost of the old equipment was
$90,000, and its accumulated depreciation at the date of exchange was $40,000. The new equipment received had a
fair value of $40,000 and a book value of $35,000. The journal entry to record this exchange will include which of the
following entries?
a. Credit accumulated depreciation $40,000
b, Debit accumulated depreciation $40,000
c. Debit loss on exchange $10,000
d. Debit loss on equipment $15,000
e. Debit equipment $40,000
f. Credit equipment $90,000
g. Debit equipment $35,000
b,c,e,f
Pearce Corporation exchanges old equipment for new equipment. The original cost of the old equipment was
$120,000, and its accumulated depreciation at the date of exchange was $40,000. The new equipment received had
a fair value of $50,000 and a book value of $32,000. The journal entry to record this exchange will include which of
the following entries?
a. Debit equipment $32,000
b. Debit loss on exchange $30,000
c. Credit accumulated depreciation $40,000
d. Debit equipment $50,000
e. Debit accumulated depreciation $40,000
f. Credit equipment $120,000
, b,d,e,f
Which of the following items are intangible assets?
A. Trademarks
B. Buildings
C. Accounts receivable
D. Land
E. Goodwill
A,E
Which of the following are long-term tangible assets?
A. Property
B. Accounts receivable
C. Equipment
D. Trademark
E. Copyright
A,C
What is the first issue that needs to be addressed in order to properly report tangible and intangible assets?
A. Determining the amounts to be included in the assets' initial cost
B. How to record the disposal of the assets
C. The method for expensing the cost of the assets
D. How to recognize additional costs incurred during the assets' service life
A
True or false: The initial cost of property, plant, and equipment includes the purchase price and all expenditures
necessary to bring the asset to its desired condition and location for use.
TRUE
An asset that has no physical substance is referred to as a(n) _________ __________
intangible asset
Which of the following items are intangible assets?
A. Equipment
B. Land
C. Trademark
D. Copyright
E. Patent
C,D,E
Because the future benefits of research and development costs are uncertain, FASB requires that research and
development costs be treated as
A. an asset on the balance sheet.
B. a contra asset on the balance sheet.
