1. Equipment with a cost of $165,850.00 has an estimated residual value of $9,461.00 and an estimated life of 3 years or 15,058 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,118 hours?
Select the correct answer.
A.$3.00
B.$32,382.85
C.$50.16
D.$52,129.67
2.
A fixed asset with a cost of $23,712 and accumulated depreciation of $21,341 is traded for a similar asset priced at $62,054 (fair market value) in a transaction with commercial substance. Assuming a trade-in allowance of $4,483, the cost basis of the new asset is
Select the correct answer.
A.$59,942
B.$62,054
C. $64,425
D.$57,571
1. Answer : B. $ 32,382.85
Depreciation expense = $ ( 165,850 - 9,461 ) / 15,058 hours * 3,118 hours = $ 32,382.85
2. Answer : B. $ 62,054
Exchanges that have commercial substance should be recorded at fair value.
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