If a Fixed Asset, Such as a Computer, Were Purchased

question 47

Multiple Choice

If a fixed asset, such as a computer, were purchased on January 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is

• A) Accumulated Depreciation Depreciation Expense
• 1,200
• 1,200
• B) Depreciation Expense Accumulated Depreciation
• 1,200
• 1,200
• C) Accumulated Depreciation Depreciation Expense
• 100
• 100
• D) Depreciation Expense Accumulated Depreciation
• 100
• 100

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Definitions:

Conversion Premium

The additional cost over the par value at which a convertible security, like a bond or preferred stock, can be converted into common stock.

Pure Discount Bond

A type of bond that is issued at a discount to its face value and pays no interest but instead pays the face value at maturity.

Total Assets

The sum of all assets owned by a company, including cash, investments, property, and other resources.

Equity

Equity represents ownership interest in a company, reflected by the shares issued by the corporation, entitling shareholders to company profits.