Question

18. Fred Company purchased machinery at the beginning of 2017 for $50,000. The machinery is estimated to have a salvage value of $2,000 and is useful for 160.000 units. It worked for 23,000 units in 2017 and 31,000 units in 2018. How much depreciation should be recorded in 2017 and 2018? $2,804 and $3,800 b. $6,900 and $9,300 $9,000 and $3,000 a. c. $16,000 and 20,000 d. 19. Winnie Corp. bought a company for $250,000 cash. The company had the following balances: Cash $50,000, Accounts Receivable $90,000, Inventory $125,000, Land & Building $135,000, Equipment $70,000, Trademark $15,000, Accounts Payable $200,000, and Notes payable $100,000. How much did Winnie pay for Goodwill? $70,000 b. $62,000. c. $250,000. d. $65,000 a. 20. Nargiza Company bought a patent in 2017 with a useful life of 4 years and a legal life of 10 years. How should patent be recorded? Patents should not be amortized. a Record amortization expense over the legal life. Record amortization expense over the legal life. d. Record amortization expense on the average of the useful and legal life. b C 21. How is goodwill created? Amount paid is less than the book value of the acquired company's net assets. b. Amount paid is less than fair value of acquired company's net assets. Amount paid exceeds book value of acquired company's net assets. d. Amount paid exceed the fair value of the acquired company's net assets. a C. 22. lona Company issues a 9 % bond while the prevailing market rate for similar bonds is 6 % . Therefore, llona has the sell the bonds at: Par a. b. A discount A premium d. Par plus 3% C. 23. Sophia Corp. issued $100,000 5 % 10 - year bonds on January 1, 2017. Interest is paid semiannually. How much interest should Sophia pay to bondholders December 31, 2018? a. $100,000 b. $5,000 c. $2,500 d. None of the above

Answer 1

18 Cost of machinery Salvage value Depreciable cost $50,000 $2,000 = Cost Salvage vahue 160,000 Units Units produced 2017 = 23,000 Units and 2018 $50,000 $2,000 = S48,000 Total estimated units 31,000 Units _ Depreciation expenses Depreciable cost * Units produced in respective year / Total estimated units Depreciation expenses in 2017 Depreciation expenses in 2018 S48,000 23,000 Units / 160,000 Units $6,900 _ $48,000 31,000 Units / 160,000 Units $9,300 = _ Ans $6,900 and S9,300

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