FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 11: Long Term Assets

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Essay

Review LaterAdd Note

Review Later

On January 2, 2009, Topanga Company purchased a machine for $90,000. The machine has a five-year estimated useful life and a $6,000 estimated residual value. In addition, the company expects to use the machine 200,000 hours. Assuming that the machine was used 35,000 hours during 2010, complete the following chart. If a figure cannot be determined, indicate so by placing an X in the box. (Show your work.)

Correct Answer

verified

a ($90,000 - $6,000) ÷ 5
b $...

View Answer

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

Equipment is purchased for $80,000. It has an eight-year useful life and a $42,750 residual value. Under the double-declining-balance method, what is the depreciation expense for year 3?

A) $11,250
B) $1,750
C) $2,250
D) $2,750

E) B) and D)
F) A) and C)

Correct Answer

verified

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

Which of the following would not be debited to the Machinery account?

The exclusive right to sell a computer program is called a copyright.

Depreciation should not be recorded for a depreciable asset that is increasing in value.

Extraordinary repairs are recorded with a debit to Accumulated Depreciation.

Starsky Manufacturing Company purchased three machines during the year: $\begin{array}{rlr}\text { Feb. 10 } & \text { Machine 1 } & \$ 1,800 \\\text { July 26 } & \text { Machine 2 } & 12,000 \\\text { Oct. 11 } & \text { Machine 3 } & 21,600\end{array}$ Each machine is expected to last six years and have no residual value. The company's fiscal year corresponds to the calendar year. Using the straight-line method, compute the depreciation charge (amounts rounded) for each machine for the year.

Speedy Printing purchased a new printing press for $80,000. It depreciates the press over a five-year period, using the double-declining-balance method of depreciation. If the press has an $8,000 estimated residual value, calculate depreciation expense for each of the five years. (Show your work.)

The cost of repairing a machine damaged during installation should be charged as an operating expense.

Which of the following depreciation methods is the most logical for a machine that produces discrete (i.e., separate) units?

Suppose an accounting intern mistakenly calculated depreciation expense on the Land account. She assigned it a 50-year life and a residual value of $10,000,000. Using the cost of the land (assume it was $811,000,000) and the straight-line method of depreciation, discuss the dollar effect of this error on pretax earnings and total assets.

A company purchases an oil well for $200,000. It estimates that the well contains 250,000 barrels, has a ten-year life, and has no salvage value. If the company extracts and sells 20,000 barrels during the first year, how much depletion expense should be recorded?

A delivery truck was purchased for $32,000 two years ago. It has a carrying value of $24,000 and an estimated residual value of $4,000. Assuming the use of straight-line depreciation, the truck's estimated useful life must have been

The Accumulated Depreciation account typically is debited when a(n)

Art obtained a five year sublease and paid $10,000 to the current tenant. The annual cost of the lease is $5,000. The entry to record the lease payment for the first year is:

In general, a cost incurred in conjunction with a long-term asset is included in the long-term asset account when the cost

The replacement of tires on a truck is considered an ordinary repair.

The Land account would include all of the following costs except

Above-average earnings is often the basis for the calculation of goodwill.

All of the following are needed for the computation of depreciation except