Question

this has a depreciable con of 90.000 22. On June 1. Scott Comey purchased and an estimated and an estimated useful life of three years or 30,000 hours in Company purchased Using straight-line de e , calculate d on 1 b $10,000 c. $12.500 d. 540.000 years and a salvage of residual value of $150, the journa a fixed asset, such as a computer, were purchased on January 1 for $3.750 with an estimated life of three age or residual value of $150, the journal entry for monthly expense under straight-line depreciation is a. Depreciation Expense 100 100 Accumulated Depreciation b. Depreciation Expense 1.200 Accumulated Depreciation 1,200 c. Accumulated Depreciation 1,200 1,200 Depreciation Expense d. Accumulated Depreciation Depreciation Expense 100 100 24. A machine with a cost of $75.000 has an estimated residual value of $5,000 and an estimated life of four ye or 18.000 hours. What is the amount of depreciation for the second full year, using the double-declining-balance meth a. $17.500 b. $37,500 c. $18,750 d. S16,667 25. The process of transferring the cost of metal ores and other minerals removed from the earth to an expy account is called a. depletion b. deferral c. amortization d. depreciation 26. The current portion of long-term debt should a. be classified as a long-term liability b. not be separated from the long-term portion of debt c. be paid immediately d. be reclassified as a current liability 27. A fixed asset's estimated value at the time it is to be retired from service is called a. book value b. residual value c. market value d. carrying value

Answer 1

22. Depreciable cost is the total cost of the asset less salvage value. Depreciable cost is depreciated over the useful life of the asset. Hence $90,000 is to be depreciated over 3 years on a straight line basis at 33.3% per annum. Since the asset is added on June 1, depreciation during the asset is for 7 months (upto December) i.e 90,000*33.33%*7/12 =17,500

23. As stated above, depreciation = 3,750 - 150 = 3,600 over 3 years that is 1,200 per annum. Journal entry for depreciation is option b.

24. Depreciation under double declining method is twice the and accelerated depreciation under straight line method. Using above formula, depreciable amount= 75,000 - 5,000 i.e 70,000, hence depreciation under straight line basis over 4 years is 17,500. Accordingly, under double declining method is 17.500*2= 35,000. Please recheck the question and options.

25. Depletion is the cost of transferring metal ores and other miners removed from earth.

26. D

27. B

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