CCIFP Construction Equipment and Asset Management

Question 1

Which depreciation method allocates an equal amount of depreciation expense each year over the asset's useful life?

Accepted Answer

Straight-line depreciation

Answer

Double declining balance

Answer

Units of production

Answer

Sum-of-the-years'-digits

Question 2

Under GAAP, heavy construction equipment is classified on the balance sheet as:

Accepted Answer

Property, plant and equipment

Answer

Current asset

Answer

Intangible asset

Answer

Prepaid expense

Question 3

A construction company purchases equipment for $150,000 with a salvage value of $15,000 and a 5-year useful life. What is the annual straight-line depreciation?

Accepted Answer

$27,000

Answer

$30,000

Answer

$25,000

Answer

$22,500

Question 4

Which equipment cost classification represents routine maintenance to keep equipment in working order?

Accepted Answer

Revenue expenditure

Answer

Capital expenditure

Answer

Betterment

Answer

Improvement

Question 5

The double declining balance method applies which rate to book value each year?

Accepted Answer

2 times the straight-line rate

Answer

1.5 times the straight-line rate

Answer

3 times the straight-line rate

Answer

The straight-line rate

Question 6

When a construction company sells a fully depreciated piece of equipment for $8,000, this amount is recognized as:

Accepted Answer

Gain on disposal of asset

Answer

Revenue from operations

Answer

Reduction of depreciation expense

Answer

Capital contribution