Deck 9: Accounting for Long-Lived and Intangible Assets

Question 1

Accumulated Depletion is the estimated cost of natural resources removed from their natural setting to date.

Answer 1

True

Question 2

On January 1, 2019, Upward Company purchased a copy machine. The machine costs $320,000, its estimated useful life is 8 years, and its expected salvage value is $20,000.
What is the depreciation expense for 2020 using double-declining-balance method?

A) $80,000
B) $60,000
C) $52,500
D) $35,000

Answer 2

$60,000

Question 3

On January 1, 2019, Seek Company purchased a copy machine. The machine costs $960,000, its estimated useful life is 8 years, and its expected salvage value is $60,000.
What is the depreciation expense for 2020 using double-declining-balance method?

A) $240,000
B) $180,000
C) $157,500
D) $105,000

Answer 3

$180,000

Question 4

Saul Company purchased a tractor at a cost of $180,000. The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years, or 12,000 hours of operation. The tractor was purchased on January 1, 2019 and was used 2,400 hours in 2019 and 2,200 hours in 2020.
What method of depreciation will produce the maximum depreciation expense in 2019?

A) Straight-line
B) Units-of-production
C) Double-declining-balance
D) All methods produce the same expense in 2019

Question 5

Saul Company purchased a tractor at a cost of $120,000. The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years, or 12,000 hours of operation. The tractor was purchased on January 1, 2019 and was used 2,400 hours in 2019 and 2,100 hours in 2020.
What method of depreciation will produce the maximum depreciation expense in 2020?

A) Straight-line
B) Units-of-production
C) Double-declining-balance
D) All methods produce the same expense in 2020

Question 6

Saul Company purchased a tractor at a cost of $180,000. The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years, or 12,000 hours of operation. The tractor was purchased on January 1, 2019 and was used 2,400 hours in 2019 and 2,200 hours in 2020.
What amount will Saul Company report as depreciation expense over the 8-year life of the equipment using straight-line depreciation?

A) $ 25,000
B) $ 40,000
C) $180,000
D) $160,000

Question 7

Spencer Company purchased a tractor at a cost of $540,000. The tractor has an estimated salvage value of $60,000 and an estimated life of 8 years, or 12,000 hours of operation. The tractor was purchased on January 1, 2019 and was used 2,400 hours in 2019 and 2,200 hours in 2020.
What amount will Spencer Company report as depreciation expense over the 8-year life of the equipment using straight-line depreciation?

A) $ 75,000
B) $120,000
C) $540,000
D) $480,000

Question 8

Saul Company purchased a tractor at a cost of $120,000 on January 1, 2019. The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years.
If Saul uses the straight-line method, what is the book value at January 1, 2023?

A) $70,000
B) $50,000
C) $82,500
D) None of the above

Question 9

Spencer Company purchased a tractor at a cost of $360,000 on January 1, 2019. The tractor has an estimated salvage value of $60,000 and an estimated life of 8 years.
If Spencer uses the straight-line method, what is the book value at January 1, 2023?

A) $210,000
B) $150,000
C) $247,500
D) None of the above

Question 10

Steve Company purchased a tractor at a cost of $180,000. The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years, or 10,000 hours of operation. The tractor was purchased on January 1, 2019 and was used 2,400 hours in 2019 and 2,100 hours in 2020. On January 1, 2021, the company decided to sell the tractor for $70,000. Steve uses the units-of-production method to account for the depreciation on the tractor.
Based on this information, the entry to record the sale of the tractor will show:

A) No gain or loss on the sale
B) A loss of $38,000
C) A loss of $70,000
D) A gain of $70,000

Question 11

Berning Company purchased a tractor at a cost of $540,000. The tractor has an estimated salvage value of $60,000 and an estimated life of 8 years, or 10,000 hours of operation. The tractor was purchased on January 1, 2019 and was used 2,400 hours in 2019 and 2,100 hours in 2020. On January 1, 2021, the company decided to sell the tractor for $210,000. Berning uses the units-of-production method to account for the depreciation on the tractor.
Based on this information, the entry to record the sale of the tractor will show:

A) No gain or loss on the sale
B) A loss of $114,000
C) A loss of $150,000
D) A gain of $150,000

Question 12

Oaks Company purchased a tractor at a cost of $180,000 on January 1, 2019. The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years. At the end of two years of service, Oaks reevaluated the tractor's useful life. Management extended the useful life an additional four years, but estimated that the tractor would have no residual value at the end of this time.
If the company uses straight-line depreciation, what amount would be recorded as the depreciation expense each year, beginning with the third year?

A) $ 7,500
B) $18,750
C) $15,834
D) $14,000

Question 13

Natalie Company purchased a tractor at a cost of $540,000 on January 1, 2019. The tractor has an estimated salvage value of $60,000 and an estimated life of 8 years. At the end of two years of service, Natalie reevaluated the tractor's useful life. Management extended the useful life an additional four years, but estimated that the tractor would have no residual value at the end of this time.
If the company uses straight-line depreciation, what amount would be recorded as the depreciation expense each year, beginning with the third year?

A) $22,500
B) $56,250
C) $47,502
D) $42,000

Question 14

Oval Company acquired a machine that involved the following expenditures and related factors:
The initial accounting cost of the machine should be:

A) $87,010
B) $84,460
C) $89,860
D) $85,600

Question 15

Triangle Company acquired a machine that involved the following expenditures and related factors:
The initial accounting cost of the machine should be:

A) $203,220
B) $253,380
C) $180,180
D) $196,380

Question 16

Peak, Inc. acquired a machine that involved the following expenditures and related factors:
The initial accounting cost of the machine should be:

A) $34,576
B) $28,016
C) $32,016
D) $31,616

Question 17

Summit, Inc. acquired a machine that involved the following expenditures and related factors:
The initial accounting cost of the machine should be:

A) $102,528
B) $ 84,480
C) $ 96,048
D) $ 94,848

Question 18

A land site for a new office building is purchased for $360,000 by Texas Coast Company. A barn on the site will be razed at a net cost of $34,000.
The $34,000 razing expenditure is properly debited to:

A) Office Building
B) Land
C) Razing Expense
D) Land Improvements

Question 19

Minerva Company purchased land and a building for a total price of $5,200,000. Individually, the land was appraised at $840,000 and the building at $4,760,000.
How much should be recorded as the acquisition cost of each asset?

A) Land, $840,000; building, $4,760,000
B) Land, $840,000; building, $4,360,000
C) Land, $780,000; building, $4,420,000
D) Land, $800,000; building, $4,400,000

Question 20

Nair Company purchased land and a building for a total price of $15,600,000. Individually, the land was appraised at $2,520,000 and the building at $14,280,000.
How much should be recorded as the acquisition cost of each asset?

A) Land, $2,520,000; building, $14,280,000
B) Land, $2,520,000; building, $13,080,000
C) Land, $2,340,000; building, $13,260,000
D) Land, $2,400,000; building, $13,200,000

Question 21

For $11,100,000, Neptune, Inc. purchased another company's land, building, and equipment. Independent appraisals indicate the values of these assets as follows: land, $1,830,000; building, $7,320,000; and equipment, $3,050,000.
How much should be recorded as the acquisition cost of each asset?

A) Land, $1,830,000; building, $7,320,000; equipment, $3,050,000
B) Land, $1,665,000; building, $6,660,000; equipment, $2,775,000
C) Land, $1,250,000; building, $7,200,000; equipment, $3,300,000
D) Land, $1,747,500; building, $6,990,000; equipment, $2,912,500

Question 22

For $33,300,000, Saturn, Inc. purchased another company's land, building, and equipment. Independent appraisals indicate the values of these assets as follows: land, $3,660,000; building, $23,790,000; and equipment, $9,150,000.
How much should be recorded as the acquisition cost of each asset?

A) Land, $3,660,000; building, $23,790,000; equipment, $9,150,000
B) Land, $3,330,000; building, $21,645,000; equipment, $8,325,000
C) Land, $3,750,000; building, $21,600,000; equipment, $9,900,000
D) Land, $3,495,000; building, $22,717,500; equipment, $8,737,500

Question 23

On January 1, 2019, Ray, Inc. acquired a new machine for $186,750. Its estimated useful life is nine years with an expected salvage value of $6,750.
Assuming straight-line depreciation, 2019 depreciation expense is:

A) $20,750
B) $16,500
C) $19,000
D) $20,000

Question 24

On January 1, 2019, Ray Roberto, Inc. acquired a new machine for $560,250. Its estimated useful life is nine years with an expected salvage value of $20,250.
Assuming straight-line depreciation, 2019 depreciation expense is:

A) $47,250
B) $49,500
C) $57,000
D) $60,000

Question 25

On April 1, 2019, Albert, Inc. acquired a new machine for $160,000. Its estimated useful life is eight years with an expected salvage value of $16,000.
Assuming straight-line depreciation, 2019 depreciation expense is:

A) $18,000
B) $13,500
C) $15,000
D) $20,000

Question 26

On April 1, 2019, Veronica, Inc. acquired a new machine for $480,000. Its estimated useful life is eight years with an expected salvage value of $48,000.
Assuming straight-line depreciation, 2019 depreciation expense is:

A) $54,000
B) $40,500
C) $45,000
D) $60,000

Question 27

On January 1, 2019, Mandarin Company purchased a new truck for $29,400. Its estimated useful life is seven years or 200,000 miles. The truck's expected salvage value is $1,400. During 2019, the truck was driven 20,000 miles.
Assuming units-of-production depreciation, 2019 depreciation expense is:

A) $2,940
B) $4,200
C) $2,800
D) $4,000

Question 28

On January 1, 2019, Mango Company purchased a new truck for $88,200. Its estimated useful life is seven years or 200,000 miles. The truck's expected salvage value is $4,200. During 2019, the truck was driven 20,000 miles.
Assuming units-of-production depreciation, 2019 depreciation expense is:

A) $10,584
B) $12,600
C) $ 8,400
D) $12,000

Question 29

On January 1, 2019, Ivey Company purchased a bottle-capping machine for $160,000. During its useful life, the company expects that the machine will cap 1,500,000 bottles. The machine's expected salvage value is $10,000. During 2019, the machine capped 250,000 bottles and during 2020, the machine capped 300,000 bottles.
Assuming units-of-production depreciation, 2020 depreciation expense is:

A) $25,000
B) $26,666
C) $30,000
D) $32,000

Question 30

On January 1, 2019, Thomas Peter Company purchased a bottle-capping machine for $480,000. During its useful life, the company expects that the machine will cap 1,500,000 bottles. The machine's expected salvage value is $30,000. During 2019, the machine capped 250,000 bottles and during 2020, the machine capped 300,000 bottles.
Assuming units-of-production depreciation, 2020 depreciation expense is:

A) $75,000
B) $79,998
C) $90,000
D) $96,000

Question 31

On January 1, 2019, Camire, Inc. purchased a new machine for $160,000. Its estimated useful life is eight years with an expected salvage value of $12,000.
Assuming double-declining balance depreciation, 2019 depreciation expense is:

A) $20,000
B) $13,500
C) $37,000
D) $40,000

Question 32

On January 1, 2019, Ceramics, Inc. purchased a new machine for $480,000. Its estimated useful life is eight years with an expected salvage value of $36,000.
Assuming double-declining balance depreciation, 2019 depreciation expense is:

A) $ 45,000
B) $ 40,500
C) $111,000
D) $120,000

Question 33

On January 1, 2019, Fullerton, Inc. purchased a new machine for $180,000. Its estimated useful life is eight years with an expected salvage value of $18,000.
Assuming double-declining balance depreciation, 2020 depreciation expense is:

A) $45,000
B) $30,375
C) $33,750
D) $40,500

Question 34

On January 1, 2019, Calvin, Inc. purchased a new machine for $192,000. Its estimated useful life is 10 years with an expected salvage value of $32,000.
Assuming double-declining balance depreciation, 2019 depreciation expense is:

A) $20,000
B) $12,000
C) $38,400
D) $32,000

Question 35

On January 1, 2019, Hobbes, Inc. purchased a new machine for $576,000. Its estimated useful life is 10 years with an expected salvage value of $96,000.
Assuming double-declining balance depreciation, 2019 depreciation expense is:

A) $ 60,000
B) $ 36,000
C) $115,200
D) $ 96,000

Question 36

On January 1, 2019, Presto, Inc. purchased a new machine for $192,000. Its estimated useful life is 16 years with an expected salvage value of $32,000.
Assuming double-declining balance depreciation, 2020 depreciation expense is:

A) $21,000
B) $17,500
C) $12,000
D) $24,000

Question 37

Equipment was purchased for $180,000 on March 1, 2019. Its estimated useful life is eight years with a $18,000 expected salvage value.
Using double-declining balance depreciation, the 2020 depreciation expense is:

A) $35,625
B) $37,500
C) $33,750
D) $40,500

Question 38

Equipment was purchased for $72,000 on October 1, 2019. Its estimated useful life is four years with a $4,200 expected salvage value.
Using double-declining balance depreciation, the 2020 depreciation expense is:

A) $31,500
B) $ 9,000
C) $ 7,500
D) $18,000

Question 39

Helmut, Inc. purchased a truck on July 1, 2019, for $37,800. At that time, the truck's useful life was an estimated five years with no salvage value. Before the entry to record 2021 depreciation was made, the truck's estimated useful life was changed to four years with a $1,400 salvage value.
Using straight-line depreciation, what is the 2021 depreciation expense?

A) $ 7,560
B) $ 9,100
C) $10,024
D) $10,584

Question 40

Raas, Inc. purchased a truck on January 1, 2019, for $144,000. At that time, the truck's useful life was an estimated four years with no salvage value. Before the entry to record 2022 depreciation was made, the truck's estimated useful life was changed to six years with a $2,700 salvage value.
Using straight-line deprecation, what is the 2022 depreciation expense?

A) $ 11,100
B) $18,000
C) $ 9,000
D) $ 4,050

Question 41

Eastern Company purchased a machine on January 1, 2019, for $180,000. At that time, the machine's useful life was an estimated six years with a zero salvage value. Just before depreciation was recorded for 2023, the machine's estimated useful life was extended by six years with a $12,000 salvage value.
Using straight-line depreciation, what is the 2023 depreciation expense?

A) $30,000
B) $13,716
C) $13,500
D) $ 6,000

Question 42

At January 1, 2019, Crane Company had total assets of $1,800,000 and at December 31, 2019, its total assets were $2,200,000. Crane's net sales for 2019 were $1,700,000 and its 2019 net income was $110,000.
Crane's return on assets for 2019 is:

A) 5.5%
B) 5.0%
C) 6.5%
D) 85.0%

Question 43

At January 1, 2019, Flamingo Company had total assets of $5,400,000 and at December 31, 2019, its total assets were $6,600,000. Flamingo's net sales for 2019 were $5,100,000 and its 2019 net income was $420,000.
Flamingo's return on assets for 2019 is:

A) 7.0%
B) 9.2%
C) 7.8%
D) 99.2%

Question 44

At January 1, 2019, Bragg Company had total assets of $1,800,000 and at December 31, 2019, its total assets were $2,200,000. Bragg's net sales for 2019 were $3,700,000 and its 2019 net income was $110,000.
Bragg's asset turnover ratio for 2019 is:

A) 0.055
B) 0.050
C) 0.065
D) 1.850

Question 45

At January 1, 2019, Bakas Company had total assets of $5,400,000 and at December 31, 2019, its total assets were $6,600,000. Markus's net sales for 2019 were $13,650,000 and its 2019 net income was $360,000.
Bakas's asset turnover ratio for 2019 is:

A) 0.070
B) 0.064
C) 0.078
D) 2.275

Question 46

At January 1, 2019, Kane Company had total assets of $2,100,000 and at December 31, 2019, its total assets were $2,400,000. Kane's net sales for 2019 were $3,000,000 and its 2021 net income was $210,000.
DuPage's return on assets for 2019 is:

A) 7.00%
B) 8.75%
C) 9.33%
D) 87.47%

Question 47

At January 1, 2019, Peter & Sons Company had total assets of $1,400,000 and at December 31, 2019, its total assets were $1,600,000. Peter & Sons' net sales for 2019 were $1,350,000 and its 2019 net income was $120,000.
Peter & Sons' asset turnover for 2019 is:

A) 0.08
B) 0.07
C) 0.90
D) 1.25

Question 48

Pokagon Store's 2019 financial statements show earnings before interest of $3,273 million, net income of $210 million, sales of $235,226 million, and average total assets of $65,025 million.
How much is Pokagon Store's asset turnover for the year?

A) 3.62
B) 0.39
C) 4.00
D) 5.88

Question 49

On January 1, 2018, Fireside Company purchased equipment for $172,000. Fireside uses straight-line depreciation and estimates an eight-year useful life and a $12,000 salvage value. On December 31, 2022, Fireside sells the equipment for $60,000.
In recording this sale, Fireside should reflect:

A) A $ 6,000 loss
B) A $24,000 loss
C) A $12,000 loss
D) No gain or loss

Question 50

On January 1, 2018, Lumos Company purchased a machine for $70,200. Lumos uses straight-line depreciation and estimates an eight-year useful life and an $5,400 salvage value. On December 31, 2021, Lumos sells the machine for $42,000.
In recording this sale, Lumos should reflect:

A) A $4,200 gain
B) A $1,200 loss
C) A $9,600 gain
D) No gain or loss

Question 51

On January 1, 2019, Shadow, Inc. purchased equipment for $54,000. Shadow uses straight-line depreciation and estimates a 10-year useful life and a $6,000 salvage value. On December 31, 2026, Shadow sells the equipment for $28,400.
In recording this sale, Shadow should reflect:

A) A $ 2,800 gain
B) A $ 3,200 gain
C) A $ 6,000 gain
D) A $12,800 gain

Question 52

On January 1, 2017, Starch, Inc. purchased a machine for $120,000. Starch uses straight-line depreciation and estimates a seven-year useful life and a $4,500 salvage value. On December 31, 2023, Starch cannot locate a buyer for the used machine so it is scrapped.
In recording the machine retirement, Starch should reflect:

A) No gain or loss
B) A $ 4,500 gain
C) A $ 4,500 loss
D) A 115,500 loss

Question 53

On January 1, 2017, Twinkle, Inc. purchased a machine for $160,000. Twinkle uses straight-line depreciation and estimates a seven-year useful life and a $6,000 salvage value. On December 31, 2023, Twinkle cannot locate a buyer for the used machine so it is scrapped.
In recording the machine retirement, Twinkle should reflect:

A) No gain or loss
B) A $6,000 gain
C) A $6,000 loss
D) A $154,000 loss

Question 54

On January 1, 2017, Cornie, Inc. purchased a machine for $111,600. Cornie uses straight-line depreciation and estimates an eight-year useful life and a $3,600 salvage value. On December 31, 2024, Cornie cannot locate a buyer for the used machine so it is scrapped.
In recording the machine retirement, Cornie should reflect:

A) No gain or loss
B) A $ 3,600 gain
C) A $ 3,600 loss
D) A $86,400 loss

Question 55

On January 1, 2017, Flute, Inc. purchased a machine for $148,800. Flute uses straight-line depreciation and estimates an eight-year useful life and a $4,800 salvage value. On December 31, 2024, Flute cannot locate a buyer for the used machine so it is scrapped.
In recording the machine retirement, Flute should reflect:

A) No gain or loss
B) A $4,800 gain
C) A $4,800 loss
D) A $115,200 loss

Question 56

On July 1, 2018, Nanette Company purchased equipment for $216,000. Nanette uses straight-line depreciation and estimates a six-year useful life and a $36,000 salvage value. On December 31, 2021, the equipment is destroyed by fire. The equipment is not insured.
The journal entry to record the equipment's destruction should reflect:

A) A $ 36,000 loss
B) A $111,000 loss
C) A $ 75,000 loss
D) A $105,000 loss

Question 57

On January 1, 2018, Salt Company purchased equipment for $32,000. Salt uses straight-line depreciation and estimates a five-year useful life and a $2,000 salvage value. On December 31, 2022, the equipment was stolen.
Assuming the equipment was not insured against theft, the journal entry to record the theft should reflect:

A) No gain or loss
B) A $30,000 loss
C) A $32,000 loss
D) A $ 2,000 loss

Question 58

Several years ago, Kokoras, Inc. purchased a computer costing $135,000, for which total depreciation of $105,000 has been recorded.
Assuming that the computer is sold for $45,000 cash, the proper entry to record the sale is:

A) Debit Cash, $45,000; debit Accumulated Depreciation, $105,000; credit Computer, $135,000
B) Debit Cash, $45,000; debit Accumulated Depreciation, $105,000; credit Computer, $144,000
C) Debit Cash, $45,000; debit Accumulated Depreciation, $105,000; credit Computer, $135,000; credit Gain on Sale of Computer, $15,000
D) Debit Cash, $45,000; credit Computer $30,000; credit Gain on Sale of Computer, $15,000

Question 59

Several years ago, Beglen, Inc. purchased a computer costing $180,000, for which total depreciation of $140,000 has been recorded.
Assuming that the computer is sold for $60,000 cash, the proper entry to record the sale is:

A) Debit Cash, $60,000; debit Accumulated Depreciation, $140,000; credit Computer, $180,000
B) Debit Cash, $60,000; debit Accumulated Depreciation, $140,000; credit Computer, $192,000
C) Debit Cash, $60,000; debit Accumulated Depreciation, $140,000; credit Computer, $180,000; credit Gain on Sale of Computer, $20,000
D) Debit Cash, $60,000; credit Computer $40,000; credit Gain on Sale of Computer, $20,000

Question 60

On June 30, 2019, Robert, Inc. sold some used equipment for $90,000. The equipment had been purchased several years ago for $195,000. Robert, Inc. properly recorded a $21,000 gain on the sale.
The accumulated depreciation on the equipment at the date of sale was:

A) $ 96,000
B) $102,000
C) $126,000
D) $ 66,000

Question 61

On June 30, 2019, Milch, Inc. sold some used equipment for $120,000. The equipment had been purchased several years ago for $260,000. Milch, Inc. properly recorded a $28,000 gain on the sale.
The accumulated depreciation on the equipment at the date of sale was:

A) $128,000
B) $136,000
C) $168,000
D) $ 88,000

Question 62

On April 30, 2019, TWC & Brothers sold some used equipment for $84,000. The accumulated depreciation on the equipment when sold was $96,000. TWC & Brothers properly recorded a $33,000 gain on the sale.
The original cost of the equipment when it was purchased several years ago by TWC & Brothers must have been:

A) $ 42,000
B) $ 75,000
C) $117,000
D) $147,000

Question 63

On April 30, 2019, Peter & Sons sold some used equipment for $112,000. The accumulated depreciation on the equipment when sold was $128,000. Peter & Sons properly recorded a $44,000 gain on the sale.
The original cost of the equipment when it was purchased several years ago by Peter & Sons must have been:

A) $ 56,000
B) $100,000
C) $156,000
D) $196,000

Question 64

During 2019, Belmont, Inc. had net sales of $19,880,000 and net income of $2,430,000. Total assets were $13,800,000 at January 1, 2019 and $16,200,000 at December 31, 2019.
Belmont's asset turnover for 2019 is:

A) 1.405
B) 0.182
C) 0.196
D) 1.325

Question 65

Grove Company's 2019 asset turnover was 3.0. The firm's total assets were $8,750,000 at January 1, 2019 and $9,300,000 at December 31, 2019.
Net sales for 2019 were:

A) $26,286,000
B) $ 4,436,445
C) $22,460,000
D) $27,075,000

Question 66

Tiffany Company's 2019 asset turnover was 3.0. The firm's total assets were $10,000,000 at January 1, 2019 and $12,400,000 at December 31, 2019. Net sales for 2019 were:

A) $25,200,000
B) $ 5,511,112
C) $27,900,000
D) $33,600,000

Question 67

Nutgum Company made a package purchase of three pieces of machinery for $48,000. The fair market values of the machinery were determined to be as follows:
What cost should Nutgum record for Machine C?

A) $12,000
B) $33,600
C) $19,200
D) $16,800

Question 68

Taffy Company made a package purchase of three pieces of machinery for $144,000. The fair market values of the machinery were determined to be as follows:
What cost should Taffy Company record for Machine C?

A) $ 36,000
B) $100,800
C) $ 57,600
D) $ 50,400

Question 69

Hubert Company purchased a property (including land and building). The company acquired the property in exchange for a 15-year mortgage for $1,800,000. Their insurance company appraised the components as follows:
What should be the cost basis for the building?

A) $1,260,000
B) $1,400,000
C) $1,200,000
D) $1,244,444

Question 70

Henry Company purchased a property (including land and building). The company acquired the property in exchange for a 15-year mortgage for $5,400,000. Their insurance company appraised the components as follows:
What should be the cost basis for the building?

A) $3,780,000
B) $3,000,000
C) $3,600,000
D) $3,633,333

Question 71

Caesar Company bought a machine on January 1, 2019. The machine cost $144,000 and had an expected salvage value of $24,000. The life of the machine was estimated to be 5 years.
Using straight line depreciation, the book value of the machine at the beginning of the third year would be:

A) $120,000
B) $48,000
C) $72,000
D) $96,000

Question 72

Apple Company bought a machine on January 1, 2019. The machine cost $432,000 and had an expected salvage value of $72,000. The life of the machine was estimated to be 5 years.
Using straight line depreciation, the book value of the machine at the beginning of the third year would be:

A) $360,000
B) $144,000
C) $216,000
D) $288,000

Question 73

Jafari Corporation purchased a truck at the beginning of 2019 for $180,000. The truck is estimated to have a salvage value of $6,000 and a useful life of 240,000 miles. It was driven 36,000 miles in 2019 and 64,000 miles in 2020.
What is the book value of the truck on December 31, 2020?

A) $111,600
B) $ 84,000
C) $107,500
D) $ 60,000

Question 74

Arabia Corporation purchased a truck at the beginning of 2019 for $540,000. The truck is estimated to have a salvage value of $18,000 and a useful life of 480,000 miles. It was driven 72,000 miles in 2019 and 128,000 miles in 2020.
What is the book value of the truck on December 31, 2020?

A) $334,800
B) $252,000
C) $322,500
D) $180,000

Question 75

On April 30, 2019, Macy Products purchased machinery for $132,000. The useful life of this machinery is estimated at 5 years, with a $32,000 residual value. The company uses the double-declining-balance method.
Depreciation expense for the fiscal year ending on December 31, 2020 will be:

A) $31,680
B) $36,800
C) $42,134
D) $38,720

Question 76

On April 30, 2019, Penny Products purchased machinery for 396,000. The useful life of this machinery is estimated at 5 years, with a $96,000 residual value. The company uses the double-declining-balance method.
Depreciation expense for the fiscal year ending on December 31, 2020 will be:

A) $ 95,040
B) $110,400
C) $126,400
D) $116,160

Question 77

On April 1, 2019, Lake Co. purchased machinery for $240,000. Salvage value was estimated to be $10,000. The machinery will be depreciated over ten years using the double-declining balance method.
If depreciation is computed on the basis of the nearest full month, determine the depreciation expense for the period January 1 thru December 31, 2020 on this machinery.

A) $41,600
B) $40,800
C) $41,400
D) $41,866

Question 78

Paden City Company purchased a new van for floral deliveries on January 1, 2019. The van cost $108,000 with an estimated life of 5 years and $12,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used.
What is the balance of the Accumulated Depreciation account at the end of 2020?

A) $43,200
B) $25,920
C) $57,600
D) $69,120

Question 79

Durham Company purchased a new van for floral deliveries on January 1, 2019. The van cost $84,000 with an estimated life of 5 years and $10,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used.
What is the balance of the Accumulated Depreciation account at the end of 2020?

A) $33,600
B) $20,160
C) $16,800
D) $53,760

Question 80

On January 1, 2018, Beast Company acquired equipment for $360,000. The estimated life of the equipment is 5 years or 20,000 hours. The estimated residual value is $60,000.
What is the amount of depreciation expense for 2020, if the company uses the double-declining-balance method of depreciation?

A) $77,760
B) $51,840
C) $43,200
D) $86,400