4. Which of the following methods will yield the same depreciation expense during the useful life of a plant asset? A. Units of activity method. C. Declining balance method. D. Accelerated method B. Straight line method 5. If a company has net sales of 500,000 and cost of good sold of 300,000 the gross profit percentage is A. 40% C. 30% B. 60% D. 70% 6. All of the following are characteristics of plant assets except A. They are acquired for use in operations or resale. B. They are long-term in nature and usually depreciated. C. They possess physical substance. D. None of the above. 7. A company purchased land for 100,000 cash. Real estate brokers' commission was 3,000 and 5,000 was spent for demolishing an old building on the land before construction of a new building could start, the cost of land would be recorded at A. 103,000 C. 108,000 B. 100,000 D. 105,000 8. Depreciable cost is the A. Book value of an asset less its salvage value. B. Cost of an asset less its salvage value. C. Cost of an asset less accumulated depreciation. D. Book value of an asset less accumulate depreciation. 9. A company decides to exchange its old machine and 7,000 cash for a new machine The old machine has a book value of 60,000 and a fair market value of 65,000 on the date of the exchange. The cost of the new machine would be recorded at C. 67,000 A. 58,000 D. 72,000 B. 65,000

4. The correct answer is B. Straight line method.<br /><br />Explanation: The straight-line method yields the same depreciation expense each year during the useful life of a plant asset. In this method, the cost of the asset is divided by the useful life to determine the annual depreciation expense.<br /><br />5. The correct answer is B. 60%.<br /><br />Explanation: Gross profit is calculated as net sales minus cost of goods sold. In this case, gross profit would be $500,000 - $300,000 = $200,000. To calculate the gross profit percentage, divide the gross profit by net sales and multiply by 100. So, ($200,000 / $500,000) * 100 = 40%.<br /><br />6. The correct answer is D. None of the above.<br /><br />Explanation: All the options provided are characteristics of plant assets. Plant assets are acquired for use in operations or resale, they are long-term in nature and usually depreciated, and they possess physical substance.<br /><br />7. The correct answer is C. $108,000.<br /><br />Explanation: The cost of land includes the purchase price, real estate brokers' commission, and any costs incurred to prepare the land for its intended use. In this case, the cost of land would be $100,000 (purchase price) + $3,000 (commission) + $5,000 (demolition cost) = $108,000.<br /><br />8. The correct answer is B. Cost of an asset less its salvage value.<br /><br />Explanation: Depreciable cost is the amount that can be depreciated over the useful life of an asset. It is calculated by subtracting the salvage value (the estimated residual value of the asset at the end of its useful life) from the cost of the asset.<br /><br />9. The correct answer is B. $65,000.<br /><br />Explanation: In an exchange transaction, the book value of the old machine is compared to its fair market value. The fair market value is the price at which the asset could be sold in an open market. In this case, the fair market value of the old machine is $65,000, which would be the recorded cost of the new machine.