CB Inventory and Fixed Assets Flashcards
6 cards from real CB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CB Inventory and Fixed Assets flashcards as text
The cost of a fixed (long-lived) asset includes all of the following EXCEPT:
Answer: Routine maintenance after acquisition
The capitalized cost of a fixed asset includes purchase price, taxes, freight, and installation, but ongoing maintenance is expensed as incurred.
Straight-line depreciation allocates an asset's depreciable cost:
Answer: Equally over the useful life
Straight-line depreciation divides (Cost − Salvage Value) by useful life, producing the same depreciation expense each year.
Under double-declining-balance (DDB) depreciation, the depreciation rate applied each year is:
Answer: Straight-line rate × 2
DDB doubles the straight-line rate (2 ÷ useful life) and applies it to the asset's declining book value each period.
When a company spends money to extend an asset's useful life beyond the original estimate, the cost should be:
Answer: Capitalized and depreciated over the remaining useful life
Expenditures that extend useful life or increase capacity are capital improvements, added to the asset's book value and depreciated going forward.
When a fully depreciated asset is sold for its salvage value, the journal entry includes:
Answer: A debit to Cash and a debit to Accumulated Depreciation, with a credit to the asset account
Selling a fully depreciated asset for salvage removes both the asset cost and its accumulated depreciation, with cash received matching the remaining book value.
Accumulated depreciation is classified on the balance sheet as:
Answer: A contra-asset
Accumulated depreciation is a contra-asset account that reduces the gross cost of property, plant, and equipment to arrive at net book value.