Learning Objective 6-5
1) A gain on the sale of a long-term asset is recorded when cash proceeds are ________.
A) less than the book value of the assets sold
B) less than the historical cost of the asset sold
C) less than the accumulated depreciation
D) greater than the book value of the asset sold
2) A loss on the sale of a long-term asset is recorded when cash proceeds are ________.
A) less than the book value of the assets sold
B) less than the historical cost of the asset sold
C) less than the accumulated depreciation
D) greater than the book value of the asset sold
3) DFS Company sold an asset for $8,500 in cash. The asset had an historical cost of $30,000 and accumulated depreciation of $20,000 on the day it was sold. How much is the gain or loss on the sale?
A) $21,500 loss
B) $10,000 loss
C) $1,500 loss
D) $1,500 gain
4) BFS Company sold an asset for $7,500 in cash. The asset had an historical cost of $30,000 and accumulated depreciation of $20,000 on the day it was sold. How much is the gain or loss on the sale?
A) $22,500 gain
B) $10,000 loss
C) $2,500 loss
D) $2,500 gain
5) A loss is a ________.
A) reduction in liabilities
B) reduction in an asset’s selling price
C) reduction in income that is incurred outside the normal course of business
D) decrease in cash related to operating a business
6) When a long-term asset is sold, both its cost and the related accumulated depreciation must be removed from the accounting records.
7) A loss results when a long-term asset is sold for less than book value.
8) A gain results when a long-term asset is sold for more than book value.