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ACC 102 Lecture 9: Ch 9 - ACC

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coppertoad742
28 Jan 2019
School
DePaul University
Department
Accountancy
Course
ACC 102
Professor
Eva Lord

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Document Summary

The machine is expected to last four years and has a residual value of ,500. The entry to record depreciation expense at the end of the first year using the straight-line method is: 3,500: the exclusive right to publish and sell a literary, artistic, or musical work is called a copyright. Sunburn fitness center purchased a new step machine for ,250. The apparatus is expected to last four years and have a residual value of . County fee for the next year: the method which divides the depreciable cost of the asset by its useful life is, Straight-line method: under the double-declining-balance method, depreciation expense results in, Times printing owned a piece of equipment that cost ,400 and on which it had recorded ,000 of accumulated depreciation. The company disposed of the equipment on january 2, the first day of business of the current year: calculate the carrying value of the equipment.

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Related Questions

Property and equipment is reported at its:

A.

historical cost.
B.

market value.
C.

book value.
D.

fair value.
E.

depreciation cost.

Uganda Corporation estimates the life of its building to be 30 years. It originally cost $300,000 and was given a residual value of $30,000. Depreciation expense per year should be:

A.

$100,000.
B.

$10,000.
C.

$300,000.
D.

$9,000.
E.

$90,000.

QUESTION 3

Western Corporation purchased a machine for $20,000 with no residual value and a life of 4 years. What is the book value of the machine at the end of Year 4?

A.

$5,000
B.

$16,000
C.

$4,000
D.

$0
E.

$20,000

QUESTION 4

The difference between the cost of an asset and its salvage value is its:

A.

historical cost.
B.

book value.
C.

fair value.
D.

depreciable base.
E.

depreciation expense.

QUESTION 5

An asset costing $50,000 with accumulated depreciation of $20,000 is sold for $25,000. What is the resulting gain or loss?

$5,000 gain

$5,000 loss

Cannot determine since salvage value is not provided in the question.

QUESTION 6

Which of the following is an example of an accelerated depreciation method?

A.

The units-of-production method
B.

The half-year convention method
C.

The fixed assets turnover method
D.

The double-declining balance method
E.

The straight-line method

QUESTION 7

Mannow Company uses the units-of-production depreciation method. Mannow purchased a machine for $80,000 with no salvage value. Mannow believes the machine will produce 400,000 units. In the first year, 90,000 units are produced. In the second year, 70,000 units are produced. What is the balance in accumulated depreciation at the end of year two?

A.

$14,000
B.

$32,000
C.

$10,000
D.

$18,000
E.

$16,000

On January 1, 2011, a company purchased a machine for$138,000. In addition, the company paid delivery costs of $1,200and $4,800 to have the machine installed. At the end of 5 years,the company expects the machine to have a residual value of$11,500. The company expects the machine will last 10,000 hours. Inthe first year, the company used the machine for 3,000 hours. (Usethese facts to answer questions 3 – 8)

Before depreciating the machine, what total amount will thecompany record as an asset for this machine?

Question 3 options:

$144,000

$138,000

$139,200

$142,800

On January 1, 2011, a company purchased a machine for$138,000. In addition, the company paid delivery costs of $1,200and $4,800 to have the machine installed. At the end of 5 years,the company expects the machine to have a residual value of$11,500. The company expects the machine will last 10,000 hours. Inthe first year, the company used the machine for 3,000 hours. (Usethese facts to answer questions 3 – 8)

Regardless of the depreciation method, what will be the amountof accumulated depreciation after the five years?

Question 4 options:

$128,500

$130,000

$132,500

$135,000

On January 1, 2011, a company purchased a machine for$138,000. In addition, the company paid delivery costs of $1,200and $4,800 to have the machine installed. At the end of 5 years,the company expects the machine to have a residual value of$11,500. The company expects the machine will last 10,000 hours. Inthe first year, the company used the machine for 3,000 hours. (Usethese facts to answer questions 3 – 8)

If the company used straight line method fordepreciation, how much depreciation expense would be recorded inthe first year?

Question 5 options:

$30,000

$28,000

$29,500

$26,500

On January 1, 2011, a company purchased a machine for$138,000. In addition, the company paid delivery costs of $1,200and $4,800 to have the machine installed. At the end of 5 years,the company expects the machine to have a residual value of$11,500. The company expects the machine will last 10,000 hours. Inthe first year, the company used the machine for 3,000 hours. (Usethese facts to answer questions 3 – 8)

If the company used units of production method for depreciation,how much depreciation expense would be recorded in the firstyear?

Question 6 options:

$40,500

$43,750

$39,750

$54,500

On January 1, 2011, a company purchased a machine for$138,000. In addition, the company paid delivery costs of $1,200and $4,800 to have the machine installed. At the end of 5 years,the company expects the machine to have a residual value of$11,500. The company expects the machine will last 10,000 hours. Inthe first year, the company used the machine for 3,000 hours. (Usethese facts to answer questions 3 – 8)

If the company used double declining balance method fordepreciation, how much depreciation expense would be recorded inthe first year?

Question 7 options:

$57,600

$60,400

$40,300

$55,430

On January 1, 2011, a company purchased a machine for$138,000. In addition, the company paid delivery costs of $1,200and $4,800 to have the machine installed. At the end of 5 years,the company expects the machine to have a residual value of$11,500. The company expects the machine will last 10,000 hours. Inthe first year, the company used the machine for 3,000 hours. (Usethese facts to answer questions 3 – 8)

If the company sells the machine at the end of 5 yearsand receives $11,000, the journal entry to record the sale willinclude which of the following?

Question 8 options:

Debit to Accumulated Depreciation for $138,000

Credit to Machine for $138,000

Debit to Loss on Sale for $500

Credit to Gain for $500

5. Archie Co. purchased a framing machine for $45,000 on January 1, 2018. The machine is expected to have a four-year life, with a residual value of $5,000 at the end of four years.


Using the straight-line method, depreciation for 2019 and book value at December 31, 2019, would be:

a. $10,000 and $20,000

b. $10,00 an $25,000

c. $11,250 and $17,500

d. $11,250 and $22,500

6. On September 30, 2018, Bricker Enterprises purchased a machine for $200,000. The estimated service life is 10 years with a $20,000 residual value. Bricker records partial-year depreciation based on the number of months in service.


Depreciation for 2018, using the double-declining balance method, would be:

a. $40,000

b. $10,000

c. $36,000

d. $9,000

7. An asset was acquired on January 1, 2018, for $15,000 with an estimated 4-year life and $1,000 residual value. The company uses straight-line depreciation. Calculate the gain or loss if the asset was sold on December 31, 2020, for $5,000.

a. $500 gain

b. $3,000 loss

c. $1,500 gain

d. $500 loss

8. On January 1, 2018, Tabitha Designs purchased a patent giving it exclusive rights to manufacture a new type of synthetic clothing for $240,000. While the patent had a remaining legal life of 15 years at the time of purchase, Tabitha expects the useful life to be only eight more years. In addition, Tabitha purchase equipment related to production of the new clothing for $140,000. The equipment has a physical life of 10 years but Tabitha plans to use the equipment only over the patent’s service life and then sell it for an estimated $20,000. Tabitha uses straight-line for all long-term assets. The amount to expense in 2021 related to the patent and equipment should be:

a. $40,000

b. $38,000

c. $45,000

d. $31,000

9. Russell Enterprises acquired a franchise from Michael Incorporated for $300,000. The franchise agreement is for a period of six years. Russell uses straight-line to amortize all intangible assets. What would be the reported book value of the franchise two years after the purchase?

a. $300,000

b. $250,000

c. $200,000

d. $100,000

10. Herman Apparel has purchased equipment on January 1, 2015, for $560,000. In 2015-2017, Herman depreciated the asset on a straight-line basis with an estimated useful life of eight years and a $80,000 residual value. In 2018, Herman has started to change its business strategy and now believes that the equipment will be used for only another two years (five years total) but does not believe the residual value has changed. What depreciation would Herman record for the year 2018 on this equipment?

a. $150,000

b. $175,000

c. $124,000

d. $ 96,000