Question

In: Accounting

16. Each of the following is an example of an asset's involuntary conversion except A) a...

16. Each of the following is an example of an asset's involuntary conversion except

A) a condemnation of property.

B) a theft of the asset.

C) the sale of a fully depreciated asset.

D) a fire damaging an asset.

17. During self-construction of an asset by Samuelson Company, the following were among the costs incurred:

Fixed overhead for the year

Portion of $1,000,000 fixed overhead that be allocated to asset if it were normal

Variable overhead attributable to self con

What amount of overhead should be included in the cost of the self-constructed asset?

A) $90,000

B) $ -0-

C) $140,000

D) $50,000

18. The major difference between the service life of an asset and its physical life is that

A) service life refers to the length of time an asset is of use to its original owner, while physical life refers to how long the asset will be used by all owners.

B) physical life is always longer than service life.

C) service life refers to the time an asset will be used by a company and physical life refers to how long the asset will last.

D) physical life is the life of an asset without consideration of salvage value and service life requires the use of salvage value.

Expert Solution

16.

Asset involuntary conversion is mandatory liquidation of asset due to fire, flooding, tornado, theft, condemnation, and when lost property is replaced by another asset or insurance proceeds.

Depreciation is not mandatory liquidation but a voluntary one.

Hence, correct option is C. the sale of a fully depreciated asset.

17.

Amount of overhead to be included in the cost of self-constructed asset = fixed overhead that would be allocated to asset + Variable overhead attributable to self-construction = 0.

figures for fixed overhead and variable overhead is missing in question. if not, correct option is $ 0.

18.

When assets are bought, they are assigned service life, the useful life where the asset is beneficial to the owner over the years. Physical life is something the user may extend over service life to get full use of asset more than intended in the beginning.

Hence, the correct option is C. service life refers to the time an asset will be used by a company and physical life refers to how long the asset will last.

ekkarill92 answered 1 year ago

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