Question 1

Chrysler Corporation purchased special tools to be used in the assembly process of the Mustang in the amount of $7,200,000. The residual value after 3 years was estimated to be $900,000. They used the straight-line method of depreciation for financial statement reporting and MACRS for the amount of depreciation reported to the IRS.
A)Which method of depreciation resulted in the largest write-off in the first year?
B)How much greater was the write-off using your answer to (a) above?

Accepted Answer

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Question 2

Loaner Industries purchased a road tractor for $56,800. Prepare a depreciation schedule using the MACRS (Modified Accelerated Cost Recovery System) method, then enter the book value at the end of year 3 as your answer. (Round all amounts to the nearest cent)

Accepted Answer

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Question 3

Striker Mining company paid $13,500,000 for a parcel of land, including the mining rights. In addition, the company spent $1,850,000 to prepare the site for mining operations. When mining is completed, it is estimated that the residual value of the asset will be $1,000,000. Mining engineers estimate that the site contains 5,000,000 tons of coal.
A)What is the average depletion cost per ton?
B)If 335,000 tons were mined in the first year of operation, what is the amount of the depletion cost?

Accepted Answer

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Question 4

Sinclair Energy Resources purchased land containing 10.4 million tons of tar sands for $2,704,000. It cost $992,000 to prepare the property for production and the residual value is $189,000. Compute the annual depletion cost if 2,226,000 tons were produced during the year. (Round depletion cost per unit to the nearest cent)

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Question 5

Fidelity Industries purchased a new truck for $128,000. The company expected the truck to last 5 years or 50,000 miles, with an estimated salvage value of $16,000 at the end of that time. In the first year, the truck was driven 17,600 miles. As the accountant for Fidelity, you can depreciate this truck using the double-declining-balance method or the units of production method.
A)Which method of depreciation will allow the largest write-off in the first year?
B)How much greater would the depreciation expense be using your answer to (a) above?

Accepted Answer

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Question 6

Walter Manufacturing purchased a new machine with a total cost of $314,000. The machine is expected to have a useful life of 8 years and a trade-in value of $26,000. If Walter uses the double-declining-balance method of depreciation, what will the accumulated depreciation be at the end of year 3? (Round to the nearest dollar)

Accepted Answer

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Question 7

Forest Agricultural Products purchased new equipment for $359,700 to process tree top oil products. Using MACRS and Tables 17-1 and 17-2 from your text, what is the accumulated depreciation at the end of year 8? (Round to the nearest dollar)

Accepted Answer

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Question 8

The original basis is the total price of an item excluding items like taxes and shipping costs.​

Accepted Answer

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Question 9

The value of an asset at any given time is called book value. It is calculated by taking the original cost less the accumulated depreciation to that point.​

Accepted Answer

The book value of an asset is indeed calculated by subtracting accumulated depreciation from its original cost, reflecting its value at a specific point in time.

Question 10

The decrease in value from the original cost of a long-term asset over its useful life is known is depreciation.​

Accepted Answer

Depreciation is the accounting process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value as the asset is used.

Question 11

Relatively fixed or permanent assets such as land, buildings, tools, equipment, and vehicles that companies acquire in the course of operating a business is referred to as short-term or current assets.​

Accepted Answer

These are referred to as long-term or fixed assets, not short-term or current assets, because they are intended for use over a long period of time and are not easily converted into cash within a short period.

Question 12

Joseph Engineering purchased a new stamping machine for $175,000 with a salvage value of $14,200. The machine is expected to have a useful life of 600,000 units of production. At the end of year 5, the machine had produced 580,000 units. In year 6, it produced 116,000 units. What was the amount of depreciation for year 6?

Accepted Answer

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Question 13

The Shaker Warehouse purchased a new conveyor belt for $28,500. The company expected it to last for 4 years and have an estimated salvage value of $5,000. Using the double-declining-balance method of depreciation, what is the amount of depreciation for year 3?

Accepted Answer

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Question 14

Stowe Lumber purchased new office furniture amounting to $64,300. Using MACRS and Tables 17-1 and 17-2 from your text:
A)What is the cost recovery percentage for the end of year 5?
B)What is the amount of depreciation expense for year 5? (Round to the nearest dollar)

Accepted Answer

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Question 15

East Park Corporation purchased a new playground set for $35,500. Freight and installation charges amounted to $3,100. For depreciation purposes, the playground set is expected to have a useful life of 27,000 hours and an estimated salvage value of $4,100. What is the depreciation per unit? (Round to the nearest cent)

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Question 16

The Lions Minor League baseball franchise purchased 5 batting cages for a total of $102,500. They are expected to have a 7 year useful life and a trade-in value of $5,000. Using the 150% declining-balance method of depreciation, what is the book value at the end of the first year?

Accepted Answer

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Question 17

The Fluffy Coin Laundry purchased new dryers for $112,000. Freight charges were $640, and installation amounted to $1,200. The dryers are expected to last 5 years and have a residual value of $4,000. The laundry elects to use the double-declining method of depreciation. What is the depreciation for year 2? (Round to the nearest dollar)

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Question 18

Candy Inc. purchased a small plane for $211,500. Its useful life is estimated as 6,000 hours, with a salvage value of $16,920. Prepare a UOP (Units-of-Production) depreciation schedule based on the given annual usage, then enter the book value at the end of year 4 as your answer. (Round all amounts to the nearest cent) $$\begin{array} { l l } 
\text { Years } & \text { Hours } \
\hline 1 & 1,375 \
2 & 1,306 \
3 & 1,238 \
4 & 1,375 \
5 & 1,582
\end{array}$$

Accepted Answer

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Question 19

Malvern Contractors purchased a new bull-dozer for $85,000. Shipping charges were $1,500 and other costs associated with the bull-dozer amounted to $925. The bull-dozer is expected to last 5 years and has a residual value of $10,000. Malvern elects to use the straight-line method of depreciation.
A)What is the amount of total depreciation?
B)What is the amount of the annual depreciation?

Accepted Answer

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Question 20

OverRoads Van Lines purchased an over-the-road tractor for $181,880. Use MACRS and Tables 17-1 and 17-2 from your text to find the book value at the end of year 3. (Round to the nearest dollar)

Accepted Answer

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Quiz 17: Depreciation

Loaner Industries purchased a road tractor for $56,800. Prepare a depreciation schedule using the MACRS (Modified Accelerated Cost Recovery System) method, then enter the book value at the end of year 3 as your answer. (Round all amounts to the nearest cent)

Forest Agricultural Products purchased new equipment for $359,700 to process tree top oil products. Using MACRS and Tables 17-1 and 17-2 from your text, what is the accumulated depreciation at the end of year 8? (Round to the nearest dollar)

The original basis is the total price of an item excluding items like taxes and shipping costs.​

The value of an asset at any given time is called book value. It is calculated by taking the original cost less the accumulated depreciation to that point.​

The decrease in value from the original cost of a long-term asset over its useful life is known is depreciation.​

Relatively fixed or permanent assets such as land, buildings, tools, equipment, and vehicles that companies acquire in the course of operating a business is referred to as short-term or current assets.​

The Shaker Warehouse purchased a new conveyor belt for $28,500. The company expected it to last for 4 years and have an estimated salvage value of $5,000. Using the double-declining-balance method of depreciation, what is the amount of depreciation for year 3?

Stowe Lumber purchased new office furniture amounting to $64,300. Using MACRS and Tables 17-1 and 17-2 from your text: A)What is the cost recovery percentage for the end of year 5? B)What is the amount of depreciation expense for year 5? (Round to the nearest dollar)

The Lions Minor League baseball franchise purchased 5 batting cages for a total of $102,500. They are expected to have a 7 year useful life and a trade-in value of $5,000. Using the 150% declining-balance method of depreciation, what is the book value at the end of the first year?

OverRoads Van Lines purchased an over-the-road tractor for $181,880. Use MACRS and Tables 17-1 and 17-2 from your text to find the book value at the end of year 3. (Round to the nearest dollar)

The original basis is the total price of an item excluding items like taxes and shipping costs.

The value of an asset at any given time is called book value. It is calculated by taking the original cost less the accumulated depreciation to that point.

The decrease in value from the original cost of a long-term asset over its useful life is known is depreciation.

Relatively fixed or permanent assets such as land, buildings, tools, equipment, and vehicles that companies acquire in the course of operating a business is referred to as short-term or current assets.