Homework Answers
7.1)
- The correct option is d.
- Cost of the equipment
= $52000+$750+$250+$2600
=$55600.
7.2)
- The correct option is c.
- The cost principle is also known as historical cost principle, which records tangible assets at historical cost
7.3)
-The correct option is a.
- For each period to record depreciation, Depreciation expense account should be debited and Accumulated dep. account should be credited.
7.4)
- The correct option is b.
- Depreciation expense (under straight line)
= (Purchase cost - salvage value)÷useful life
= ($600000-$10000)÷5yrs
= $118000.
- Accumulated Depreciation for year ended 31 Dec 2019 i.e., for 2 years
= Dep. Expense × 2 yrs
= $118000×2
= $236000.
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Multiple-Choice Exercise 7-1 Anniston Company purchased equipment and incurred the following costs: Purchase price $52,000 Cost...
Multiple Choice Question On Janu. year 1, Roark Corp purchased equipment for $120,000. The equipment has...
Multiple Choice Question On Janu. year 1, Roark Corp purchased equipment for $120,000. The equipment has a residual value of $20,000, and has a life of 1,000,000 hours, Roark uses the units-of-production method of depreciation. In year 1, Roark used the machine 30,000 hours, and in year 2, Roark used the machine 50,000 hours. What is the depreciation expense for year 2? O $5,000 $6,000 O $3,000 O $8,000
Multiple Choice Question 72 Vaughn Company purchased equipment and these costs were incurred: Cash price $64900 Sal...
Multiple Choice Question 72
Vaughn Company purchased equipment and these costs were
incurred:
Cash price
$64900
Sales taxes
3200
Insurance during transit
620
Installation and testing
890
Total costs
$69610
Vaughn will record the acquisition cost of the equipment as
$68720.
$69610.
$64900.
$68100.
ABC Company bought a piece of equipment on January 1, 2017. The original price was $30,000....
ABC Company bought a piece of equipment on January 1, 2017. The original price was $30,000. Because ABC paid in cash, they received a 20% discount on the original price. To prepare the equipment for its intended use, ABC incurred $100 installation costs and $1,000 shipping costs. They hired an employee to operate the equipment for an annual salary of $20,000. Finally, the company paid an insurance premium of $400 in advance. The company estimated the equipment’s useful life to...
Exercise 9-20 Sunland Company purchased a new machine on October 1, 2017, at a cost of...
Exercise 9-20 Sunland Company purchased a new machine on October 1, 2017, at a cost of $86,600. The company estimated that the machine has a salvage value of $8,400. The machine is expected to be used for 65,700 working hours during its 8-year life. Compute depreciation using the following methods in the year indicated. Declinng-balance using double the straight-line rate for 2017 and 2018. (Round answers to 0 decimal places, e.g. 125) 2017 2018 Depreciation using the Declining-balance method s...
The Dalen Company purchased office equipment that cost $6,300 cash on January 1. The equipment had...
The Dalen Company purchased office equipment that cost $6,300 cash on January 1. The equipment had an estimated five year useful life and an estimated salvage value of $700. The amount of expense shown on the income statement and the amount of cash outflow from operating activities shown on the statement of cash flows at the end of the first year would be assume straight-line depreciation Income Statement $6,3ee $1,120 $1,120 Statement of Cash Flows $6,300 $6,300 $1,120 Multiple Choice...
Johnson Company purchased factory equipment with an invoice price of $150,000. Other costs incurred were freight...
Johnson Company purchased factory equipment with an invoice price of $150,000. Other costs incurred were freight costs, $1,200; installation wiring and foundation, $2,100; material and labor costs in testing equipment, $700; oil lubricants and supplies to be used with equipment, $500; fire insurance policy covering equipment, $1,400. The equipment is estimated to have a $5,000 salvage value at the end of its 10-year useful service life. Requirements: 1) Compute the acquisition cost of the equipment. Clearly identify each element of...
machine 1: cost 76,000 salvage value 6,000 useful life 10 years purchased 7/1/16 machine 2: cost...
machine 1:
cost 76,000
salvage value 6,000
useful life 10 years
purchased 7/1/16
machine 2:
cost 80,000
salvage value 10,000
useful life 8 years
purchased 1/1/13
machine 3:
cost 78,000
salvage value 6,000
useful life 6 years = 24,000 hours
purchased 1/1/18
Problem: In recent years, Hrubeck Company purchased three machines. Because of heavy turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods were selected. Information concerning...
5) Mandy Manufacturing purchased a machine on August 1, 2014, and it was installed and ready...
5) Mandy Manufacturing purchased a machine on August 1, 2014, and it was installed and ready to run on January 1, 2015. The following costs were incurred in the purchase and installation of the machine. Invoice price $ 1,300,000 Freight costs 7.000 Purchase discount 2.500 Installation costs 66,000 Electrical and power connections 32,000 Repairs to correct damage incurred during uncrating 12.000 Adjustment costs 36,000 Spare parts for future use 25,000 Provincial sales tas 91.000 Fines incurred during the transport and...
Exercise 22-12 On January 1, 2014, Pearl Company purchased a building and equipment that have the...
Exercise 22-12 On January 1, 2014, Pearl Company purchased a building and equipment that have the following useful lives, salvage values, and costs. Building, 40-year estimated useful life, $53,200 salvage value, $746,800 cost Equipment, 12-year estimated useful life, $10,800 salvage value, $103,500 cost The building has been depreciated under the double-declining-balance method through 2017. In 2018, the company decided to switch to the straight-line method of depreciation. Pearl also decided to change the total useful life of the equipment to...
The cost of equipment purchased by Waterway, Inc., on June 1, 2017, is $95,230. It is...
The cost of equipment purchased by Waterway, Inc., on June 1,
2017, is $95,230. It is estimated that the machine will have a
$5,350 salvage value at the end of its service life. Its service
life is estimated at 7 years, its total working hours are estimated
at 44,940, and its total production is estimated at 561,750 units.
During 2017, the machine was operated 6,420 hours and produced
58,850 units. During 2018, the machine was operated 5,885 hours and
produced...
Multiple Choice Question On Janu. year 1, Roark Corp purchased equipment for $120,000. The equipment has a residual value of $20,000, and has a life of 1,000,000 hours, Roark uses the units-of-production method of depreciation. In year 1, Roark used the machine 30,000 hours, and in year 2, Roark used the machine 50,000 hours. What is the depreciation expense for year 2? O $5,000 $6,000 O $3,000 O $8,000
Multiple Choice Question 72
Vaughn Company purchased equipment and these costs were
incurred:
Cash price
$64900
Sales taxes
3200
Insurance during transit
620
Installation and testing
890
Total costs
$69610
Vaughn will record the acquisition cost of the equipment as
$68720.
$69610.
$64900.
$68100.
Exercise 9-20 Sunland Company purchased a new machine on October 1, 2017, at a cost of $86,600. The company estimated that the machine has a salvage value of $8,400. The machine is expected to be used for 65,700 working hours during its 8-year life. Compute depreciation using the following methods in the year indicated. Declinng-balance using double the straight-line rate for 2017 and 2018. (Round answers to 0 decimal places, e.g. 125) 2017 2018 Depreciation using the Declining-balance method s...
The Dalen Company purchased office equipment that cost $6,300 cash on January 1. The equipment had an estimated five year useful life and an estimated salvage value of $700. The amount of expense shown on the income statement and the amount of cash outflow from operating activities shown on the statement of cash flows at the end of the first year would be assume straight-line depreciation Income Statement $6,3ee $1,120 $1,120 Statement of Cash Flows $6,300 $6,300 $1,120 Multiple Choice...
machine 1:
cost 76,000
salvage value 6,000
useful life 10 years
purchased 7/1/16
machine 2:
cost 80,000
salvage value 10,000
useful life 8 years
purchased 1/1/13
machine 3:
cost 78,000
salvage value 6,000
useful life 6 years = 24,000 hours
purchased 1/1/18
Problem: In recent years, Hrubeck Company purchased three machines. Because of heavy turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods were selected. Information concerning...
5) Mandy Manufacturing purchased a machine on August 1, 2014, and it was installed and ready to run on January 1, 2015. The following costs were incurred in the purchase and installation of the machine. Invoice price $ 1,300,000 Freight costs 7.000 Purchase discount 2.500 Installation costs 66,000 Electrical and power connections 32,000 Repairs to correct damage incurred during uncrating 12.000 Adjustment costs 36,000 Spare parts for future use 25,000 Provincial sales tas 91.000 Fines incurred during the transport and...
Exercise 22-12 On January 1, 2014, Pearl Company purchased a building and equipment that have the following useful lives, salvage values, and costs. Building, 40-year estimated useful life, $53,200 salvage value, $746,800 cost Equipment, 12-year estimated useful life, $10,800 salvage value, $103,500 cost The building has been depreciated under the double-declining-balance method through 2017. In 2018, the company decided to switch to the straight-line method of depreciation. Pearl also decided to change the total useful life of the equipment to...
The cost of equipment purchased by Waterway, Inc., on June 1,
2017, is $95,230. It is estimated that the machine will have a
$5,350 salvage value at the end of its service life. Its service
life is estimated at 7 years, its total working hours are estimated
at 44,940, and its total production is estimated at 561,750 units.
During 2017, the machine was operated 6,420 hours and produced
58,850 units. During 2018, the machine was operated 5,885 hours and
produced...
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