Question 1

On January 1,2012,a company buys a truck for $42,000 cash.It has estimated residual value of $2,000,and an estimated life of 8 years,or 200,000 miles.If the company uses straight-line depreciation,please show the journal entry for the first year depreciation.
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Accepted Answer

The answer of On January 1,2012,a company buys a truck...

Question 2

Charterhouse Services purchased a van on January 1,2012,for $56,000.It has an estimated life of 5 years,and an estimated salvage value of $6,000.Charterhouse uses straight-line depreciation.At the end of 2013,what was the book value of the asset?

Accepted Answer

A) Calculations: $56,000 - [($56,000 - $6000)/5] × 2 = $36,000

Question 3

Avery Sales purchased telecom equipment for $12,000 on October 1,2013.It has estimated residual value of $1,800,and an estimated life of 8 years.If Avery uses double-declining-balance depreciation,how much expense will be recorded in 2013?

Accepted Answer

C) Calculations: $12,000 × 1/8 × 2 × 3/12 = $250

Question 4

On January 1,2014,a company buys a truck for $42,000 cash.It has estimated residual value of $2,000,and an estimated life of 8 years,or 200,000 miles.Please provide the journal entry for the purchase of the truck.
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Accepted Answer

The answer of On January 1,2014,a company buys a truck...

Question 5

On January 1,2012,a company buys a truck for $42,000 cash.It has estimated residual value of $2,000,and an estimated life of 4 years,or 200,000 miles.Assume the company uses straight-line depreciation.Please complete the depreciation schedule below.  $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $$\text { Depreciation for the Year }$
$\begin{array}{|c|c|c|c|c|c|c}
\hline \text { Date } & \text { Asset Cost } & \begin{array}{c}
\text { Depreciable } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Depreciation } \
\text { Rate }
\end{array} & \begin{array}{c}
\text { Depreciation } \
\text { Expense }
\end{array} & \begin{array}{c}
\text { Accumulated } \
\text { Depreciation }
\end{array} & \begin{array}{c}
\text { Book } \
\text { Value }
\end{array} \
\hline 1-1-2012 \
\hline 12-31-2012 \
\hline 12-31-2013 \
\hline 12-31-2014 \
\hline 12-31-2015 \
\hline
\end{array}$

Accepted Answer

The answer of On January 1,2012,a company buys a truck...

Question 6

On January 1,2013,a company buys a truck for $42,000 cash.It has estimated residual value of $2,000,and an estimated life of 4 years,or 200,000 miles.Assume the company uses units-of-production depreciation.The truck drove 40,000 miles in 2013,60,000 miles in 2014,80,000 miles in 2015,and 20,000 miles in 2016.What is the depreciation rate?

Accepted Answer

C) Calculations: ($42,000 - 2,000)/200,000 = $0.20

Question 7

Avery Sales purchased telecom equipment for $5,000 on July 1,2013.It has estimated residual value of $200,and an estimated life of 8 years.If Avery uses straight-line depreciation,how much expense will be recorded in 2013?

Accepted Answer

B) Calculations: [($5,000 - $200)/8] × 6/12 = $300

Question 8

An asset has a life of 3 years.It cost $90,000 and has an expected salvage value of $15,000.Using double-declining-balance depreciation,what is the depreciation for Year 1?

Accepted Answer

B) Calculations: $90,000 × 1/3 × 2 = $60,000

Question 9

Pallmall Company has a truck that was purchased in prior years for $60,000.At the end of 2014,there is $30,000 of accumulated depreciation.The value of the truck has been impaired,and its remaining value is now estimated at $18,000.When Pallmall adjusts for the loss of value,how much will the loss on impairment be?

Accepted Answer

B) Calculation: $60,000 - $30,000 - $18,000 = $12,000

Question 10

Charterhouse Services purchased a van on January 1,2012,for $56,000.It has an estimated life of 5 years,and an estimated salvage value of $6,000.Charterhouse uses straight-line depreciation.At the end of 2013,Charterhouse revised the estimated life of the asset from 5 years to 6 years.How much was the depreciation expense in the year 2014?

Accepted Answer

D) Calculations: $56,000 - [($56,000 - $6000)/5] × 2 = $36,000
($36,000 - $6,000)/4 = $7,500

Question 11

A factory has a machine costing $76,000.It has a 5-year life and an estimated capacity of 160,000 parts.The salvage value of the machine is zero.Assume 35,000 parts are machined in the first year of operation.Using the units-of-production method,what is the depreciation expense in Year 1?

Accepted Answer

A) Calculations: ($76,000/160,000) × 35,000 = $16,625

Question 12

A company purchased a computer on July 1,2012.The computer has an estimated useful life of 5 years and will have no salvage value.It was purchased for $10,000.It is estimated that the computer can be used for 5,000 hours.The computer was used for 450 hours during 2012.If the goal is to record higher depreciation expense in the earlier years,which method should be used?

Accepted Answer

The double-declining-balance method will result in higher depreciation expenses in the earlier years because it applies a higher depreciation rate to the asset's book value. This method is better suited for assets that have a higher expected rate of depreciation in the early years of their useful life, which is consistent with the goal stated in the question. The units-of-production method would be better suited in situations where usage or output is a more accurate representation of an asset's wear and tear, but this is not the case for a computer. The straight-line and First-In, First-Out methods do not consider usage or output and would not result in higher depreciation expenses in the earlier years.

Question 13

Charterhouse Services purchased a van on January 1,2012,for $56,000.It has an estimated life of 5 years,and an estimated salvage value of $6,000.Dawson uses straight-line depreciation.At the end of 2014,Charterhouse revised the estimated life of the asset from 5 years to 8 years.How much was the depreciation expense in the year 2015?

Accepted Answer

B) Calculations: [($56,000 - $6,000)/5] × 3 = $30,000
($56,000 - $30,000 - $6,000)/5 = $4,000

Question 14

On January 1,2012,a company buys a truck for $42,000 cash.It has estimated residual value of $2,000,and an estimated life of 4 years,or 200,000 miles.Assume the company uses units-of-production depreciation.The truck drove 40,000 miles in 2012,60,000 miles in 2013,80,000 miles in 2014,and 20,000 miles in 2015.Please complete the depreciation schedule below.  $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $$\text { Depreciation for the Year }$
$$\begin{array} { | c | c | c | c | c | c | c | } 
\hline \text { Date } & \text { Asset Cost } & \begin{array} { c } 
\text { Depreciable } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Depreciation } \
\text { Rate }
\end{array} & \begin{array} { c } 
\text { Depreciation } \
\text { Expense }
\end{array} & \begin{array} { c } 
\text { Accumulated } \
\text { Depreciation }
\end{array} & \begin{array} { c } 
\text { Book } \
\text { Value }
\end{array} \
\hline 1 - 1 - 2012 & & & & & & \
\hline 12 - 31 - 2012 & & & & & & \
\hline 12 - 31 - 2013 & & & & & & \
\hline 12 - 31 - 2014 & & & & & & \
\hline 12 - 31 - 2015 & & & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of On January 1,2012,a company buys a truck...

Question 15

On January 1,2012,a company buys a truck for $42,000 cash.It has estimated residual value of $2,000,and an estimated life of 8 years,or 200,000 miles.
-If the company uses double-declining-balance depreciation,please show the journal entry for the first year depreciation.
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\hline \quad\quad\quad&\quad&\quad \
\hline \
\hline
\end{array}$$

Accepted Answer

The answer of On January 1,2012,a company buys a truck...

Question 16

On January 1,2012,a company buys equipment for $10,000.It has estimated residual value of $1,000,and an estimated life of 5 years.Assume the company uses double-declining-balance depreciation.Please complete the depreciation schedule below.  $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $$\text { Depreciation for the Year }$$$\begin{array} { | c | c | c | c | c | c | c | }

\hline \text { Date } & \text { Asset Cost } & \begin{array} { c } 
\text { Depreciable } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Depreciation } \
\text { Rate }
\end{array} & \begin{array} { c } 
\text { Depreciation } \
\text { Expense }
\end{array} & \begin{array} { c } 
\text { Accumulated } \
\text { Depreciation }
\end{array} & \begin{array} { c } 
\text { Book } \
\text { Value }
\end{array} \
\hline 1 - 1 - 2012 & & & & & & \
\hline 12 - 31 - 2012 & & & & & & \
\hline 12 - 31 - 2013 & & & & & & \
\hline 12 - 31 - 2014 & & & & & & \
\hline 12 - 31 - 2015 & & & & & & \
\hline 12 - 31 - 2016 & & & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of On January 1,2012,a company buys equipment for...

Question 17

Avery Sales purchased telecom equipment for $5,000 on November 1,2013.It has estimated residual value of $200,and an estimated life of 8 years.If Avery uses straight-line depreciation,how much expense will be recorded in 2013?

Accepted Answer

C) Calculations: [($5,000 - $200)/8] × 2/12 = $100

Question 18

If an asset's physical condition deteriorates more rapidly than would be reflected by normal depreciation,that is referred to as:

Accepted Answer

Asset impairment refers to situations where an asset's value on the balance sheet exceeds its recoverable value due to factors such as physical damage, obsolescence, or changes in market conditions. This can lead to a write-down of the asset's value on the balance sheet, which is typically reported in the income statement as a loss. Accelerated depreciation refers to a method of depreciation that allows a company to deduct a larger portion of the asset's cost in the early years of its life to reflect the asset's rapid loss of value, while asset disposal refers to the process of getting rid of or selling an asset that is no longer needed. Shrinkage refers to the loss of inventory, cash, or other assets due to theft, fraud, or other factors.

Question 19

An asset costs $80,000 and has a salvage value of $7,000.It has a four-year life.Using double-declining-balance depreciation,Year 2 depreciation would be:

Accepted Answer

C) Calculations: $80,000 × ¼ × 2 = $40,000
($80,000 - $40,000) × ¼ × 2 = $20,000

Question 20

On January 1,2012,a company buys a truck for $42,000 cash.It has estimated residual value of $2,000,and an estimated life of 8 years,or 200,000 miles.
-At the end of 2012,the truck had driven 30,000 miles.If the company uses units-of-production depreciation,please show the journal entry for the first year depreciation.
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\hline \quad\quad\quad&\quad&\quad \
\hline \
\hline
\end{array}$$

Accepted Answer

The answer of On January 1,2012,a company buys a truck...

Quiz 9: Plant Assets and Intangibles

Charterhouse Services purchased a van on January 1,2012,for $56,000.It has an estimated life of 5 years,and an estimated salvage value of $6,000.Charterhouse uses straight-line depreciation.At the end of 2013,what was the book value of the asset?

Avery Sales purchased telecom equipment for $12,000 on October 1,2013.It has estimated residual value of $1,800,and an estimated life of 8 years.If Avery uses double-declining-balance depreciation,how much expense will be recorded in 2013?

Avery Sales purchased telecom equipment for $5,000 on July 1,2013.It has estimated residual value of $200,and an estimated life of 8 years.If Avery uses straight-line depreciation,how much expense will be recorded in 2013?

An asset has a life of 3 years.It cost $90,000 and has an expected salvage value of $15,000.Using double-declining-balance depreciation,what is the depreciation for Year 1?

A factory has a machine costing $76,000.It has a 5-year life and an estimated capacity of 160,000 parts.The salvage value of the machine is zero.Assume 35,000 parts are machined in the first year of operation.Using the units-of-production method,what is the depreciation expense in Year 1?

Avery Sales purchased telecom equipment for $5,000 on November 1,2013.It has estimated residual value of $200,and an estimated life of 8 years.If Avery uses straight-line depreciation,how much expense will be recorded in 2013?

If an asset's physical condition deteriorates more rapidly than would be reflected by normal depreciation,that is referred to as:

An asset costs $80,000 and has a salvage value of $7,000.It has a four-year life.Using double-declining-balance depreciation,Year 2 depreciation would be: