Question

1.

TB 09-82 A machine that cost $40,000 and had accumula...

A machine that cost $40,000 and had accumulated depreciation of $30,000 was traded in on a new machine, which had an estimated 20-year life and a cash price of $50,000. If a $7,000 trade-in allowance was received on the old machine, the new machine should be valued at

Multiple Choice

• $53,000

• $10,000

• $47,000

• $50,000

• $40,000

• The cost of an asset includes all normal and reasonable expenditures necessary to get it in place and ready for its intended use.

  True or False

  TrueFalse

• On January 1 of this year, SportsWorld purchased a new cash register for $5,400. This register has a useful life of 10 years and a residual value of $400. Using the double-declining-balance method, how much depreciation expense should SportsWorld recognize for next year?

  Multiple Choice

• $1,080

• $1,000

• $540

• $864

• $500

• TB 09-85 On April 3, 2020,

  On April 3, 2020, Rainbow Studios purchased a patent for $56,000. Its remaining legal life is 7 years and Rainbow Studios estimates that the patent will be useful for another 4 years. The correct adjusting entry to record amortization of the patent on December 31, 2020 is

  Multiple Choice

• Patent	10,500
  Accumulated Amortization, Patent		10,500

• Amortization Expense, Patent	8,000
  Accumulated Amortization, Patent		8,000

• Amortization Expense, Patent	6,000
  Accumulated Amortization, Patent		6,000

• Amortization Expense, Patent	10,500
  Accumulated Amortization, Patent		10,500

• Amortization Expense, Patent	14,000
  Accumulated Amortization, Patent		14,000

Answer 1

1. The cost of new Machine would be 47000.

Cost of New Machine (Cash Price) - 50000.

Sale of Old Machine - 7000

Loss on Sale of Old Machine - 3000 (40000-30000-7000).

2.Depreciation for the Year would be 1080

5400*2/10 = 1080.

3. Amortization Expense Patent Dr 8000

Accumulated Amortization Patent 8000.

As Amortization would be calculated as per the legal Expense.