Question 1

A company purchased equipment valued at $825,000 on January 1.The equipment has an estimated useful life of seven years or six million units.The equipment is estimated to have a salvage value of $35,000.Assuming the straight-line method of depreciation,what is the book value at the end of the second year if .5 million units were produced?

Accepted Answer

(825,000-35,000)/7 = 112,857.14 X2 = 225,714.28 (Accumulated Deprec.)
BV: Cost 825,000-225,714.28 = $599,285.72

Question 2

A company purchased a truck on October 1 of the current year at a cost of $40,000.The truck is expected to last six years and have a salvage value of $2,200.The company's annual accounting period ends on December 31.
1.What is the depreciation expense for the current year,assuming the straight-line method is used?
2.What is the depreciation expense for the current year,assuming the double-declining-balance method is used?

Accepted Answer

The answer of A company purchased a truck on October...

Question 3

On September 30 of the current year,a company acquired and placed in service a machine at a cost of $700,000.It has been estimated that the machine has a service life of five years and a salvage value of $40,000.Using the double-declining-balance method of depreciation,prepare a schedule showing depreciation amounts for the current year and the next 4 years (round answers to the nearest dollar).The company closes its books on December 31 of each year.

Accepted Answer

**for 9 months; adjusted down to the salvage value ($81,648 - $40,000 = $41,648)

Question 4

What are the general accounting procedures for recording asset disposals?

Accepted Answer

The answer of What are the general accounting procedures for...

Question 5

On July 1 of the current year,a company purchased and placed in service a machine with a cost of $240,000.The company estimated the machine's useful life to be four years or 60,000 units of output with an estimated salvage value of $60,000.During the current year,15,000 units were produced.
Prepare the necessary December 31 adjusting journal entry to record depreciation for the current year assuming the company uses:
A) The straight-line method of depreciation
B) The units-of-production method of depreciation
C) The double-declining balance method of depreciation

Accepted Answer

11ea8a0c_3541_da44_8b44_4f2d90ccd539_TB6314_00
 ($240,000 x .5) x 6/12 = $60,000

Question 6

Describe the accounting for natural resources,including their acquisition,cost allocation and account titles.

Accepted Answer

The answer of Describe the accounting for natural resources,including their...

Question 7

A company purchased equipment valued at $825,000 on January 1.The equipment has an estimated useful life of seven years or six million units.The equipment is estimated to have a salvage value of $35,000.Assuming the double declining balance method of depreciation,what is the annual depreciation for the second year if .5 million units were produced?

Accepted Answer

100%/7 = 14*2 = 28% DDB
Year 1: 825,000*.28 = $231,000 (Depreciation) BV: 594,000
Year 2: 594,000*.28 = $166,320 (Depreciation)

Question 8

A machine was purchased for $37,000 and depreciated for five years on a straight-line basis under the assumption it would have a ten-year life and a $1,000 salvage value.At the beginning of the machine's sixth year it was recognized the machine had three years of remaining life instead of five and that at the end of the remaining three years its salvage value would be $1,600.What amount of depreciation should be recorded in each of the machine's remaining three years?

Accepted Answer

The answer of A machine was purchased for $37,000 and...

Question 9

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

Accepted Answer

The answer of Explain the difference between revenue expenditures and...

Question 10

Explain how to calculate total asset turnover.Describe what it reveals about a company's financial condition,whether a higher or lower ratio is desirable and how it is best applied for comparative purposes.

Accepted Answer

The answer of Explain how to calculate total asset turnover.Describe...

Question 11

Explain (in detail)how to compute each of the following depreciation methods: straight-line,units-of-production and double-declining-balance.

Accepted Answer

The answer of Explain (in detail)how to compute each of...

Question 12

A company purchased a machine for $75,000 that was expected to last 6 years and have a salvage value of $6,000.At the beginning of the machine's fourth year the company decided that the machine's estimated useful life should be revised to a total of 10 years instead of 6 years.Also,the salvage value was re-estimated to be $5,500.Straight-line depreciation was used throughout the machine's life.Calculate the depreciation expense for the fourth year of the machine's useful life.

Accepted Answer

The answer of A company purchased a machine for $75,000...

Question 13

Compare the different depreciation methods (straight-line,units-of-production and double-declining-balance)with respect to the computation of depreciation per period and the total depreciation over the life of the asset.

Accepted Answer

The answer of Compare the different depreciation methods (straight-line,units-of-production and...

Question 14

Describe the accounting for intangible assets,including their acquisition,cost allocation and accounts involved.

Accepted Answer

The answer of Describe the accounting for intangible assets,including their...

Question 15

On April 1,2010,SAS Corp.purchased and placed in service a plant asset.The following information is available regarding the plant asset:
 $\begin{array}{|l|r|}
\hline \text { Acquisition cost } & \$ 130,000 \
\hline \text { Estimated salvage value } & \$ 15,000 \
\hline \text { Estimated useful life } & 5 \text { years } \
\hline
\end{array}$  
Make the necessary adjusting journal entries at December 31,2010 and December 31,2010 to record depreciation for each year under the following depreciation methods: 
a. Straight-line
b. Double-declining-balance.

Accepted Answer

The answer of On April 1,2010,SAS Corp.purchased and placed in...

Question 16

A company's property records revealed the following information about its plant assets:
 $$\begin{array} { | c | r | r | r | l | } 
\hline \begin{array} { c } 
\text { Machine } \
\text { No. }
\end{array} & \text { Cost } & \text { Salvage Value } & \text { Purchase Date } & \begin{array} { c } 
\text { Depreciation Method and } \
\text { Estimate Life }
\end{array} \
\hline 1 & \$ 42,000 & \$ 3,000 & 10 / 1 / 08 & \text { Straight-line (3 years) } \
\hline 2 & 86,000 & 8,600 & 7 / 1 / 08 & \begin{array} { l } 
\text { Double-declining-balance } \
\text { (5 years) }
\end{array} \
\hline
\end{array}$$ 
Calculate the depreciation expense for each machine for the year ended December 31,2010 and for the year ended December 31,2009.
Machine 1:
2009 _______________________
2010 _______________________
Machine 2:
2009 _______________________
2010 _______________________

Accepted Answer

The answer of A company's property records revealed the following...

Question 17

Beauty Company purchased a machine valued at $565,000 on September 1.The equipment has an estimated useful life of eight years or 5.5 million units.The equipment is estimated to have a salvage value of $48,300.Assuming the double declining balance method of depreciation is used,what is the amount of depreciation expense that needs to be recorded at the end of the second year if 800,000 units were produced?

Accepted Answer

100%/8= 12.5 * 2 = 25% DDB
Year 1 565,000*.25 = 141,250 * 4/12= 47,083 BV: 517,917
Year 2: 517,917*.25= 129,479

Question 18

A company purchased equipment valued at $825,000 on January 1.The equipment has an estimated useful life of seven years or six million units.The equipment is estimated to have a salvage value of $35,000.Assuming the straight-line method of depreciation,what is the annual depreciation for the second year if .5 million units were produced?

Accepted Answer

(825,000-35,000)/7 = $112,857.14

Question 19

On April 1,2010 a company discarded a machine that had cost $10,000 and had accumulated depreciation of $8,000 as of December 31,2009.The asset had a 5-year life and no salvage value.Prepare the journal entries to record the updating of the depreciation expense and discarding of this asset.

Accepted Answer

The answer of On April 1,2010 a company discarded a...

Question 20

A company entered into the following transactions concerning its computer system:
On January 1,2009 purchased a computer system that cost $1,480,000.The estimated useful life of the computer is 3 years and salvage value is $40,000.Straight-line depreciation is to be used.On January 1,2010 the company determined that the estimated useful life of the computer would be 4 years instead of 3 years.The estimated salvage value will only be $10,000.
a. Prepare the journal entry to record depreciation expense for 2010.
b. Prepare the journal entry to record depreciation expense for 2010.

Accepted Answer

The answer of A company entered into the following transactions...

Quiz 8: Reporting and Analyzing Long-Term Assets