Question

10 points QUESTION 4 Save Answer In 2018 Vickers Company purchased equipment for $140,000 and recorded $20,000 in depreciation expense. How does the recording of the equipment purchase and the depreciation expense affect the statement of cash flows? Cash flow for operating activities ($20,000); cash flow for investing А. activities ($140,000) B. Cash flow for investing activities ($160,000) C. Cash flow for operating activities ($140,000) D. Cash flow for investing activities ($140,000) 10 points QUESTION 5 Save Answer On January 1, 2018, Golden Company purchased a delivery truck for $64,000. The van was estimated to have a 5-year useful life or 100,000 miles. Salvage value was estimated at $4,000. The van was driven 25,000 miles in 2018 and 22,000 miles in 2019. Which of the following is an incorrect statement? Depreciation expense for 2018 using the units-of-production method is А. $15,000 Depreciation expense for 2019 using the units-of-production method is В. $13,200 Depreciation expense for 2019 using the units-of-production method is С. $13,200. Depreciation expense for 2019 using the double-declining balance D. method is $14,400

Answer 1

Part 4)

The correct answer is D) cash flow from investing activities ($140000)

Explanation

Purchase of equipment for $ 140000 is a cash outflow from financing activities, as purchase of equipment is part of investing activities and depreciation is a non cash item, doesn't lead to cash outflow.

Part 5)

The answer is D) depreciation expense for 2019 using double declining balance method is $ 14400

Calculation

Double declining depreciation rate

= (1/5)×100×2

=40%

Wdv at the beginning of 2019 = 64000 × (1-40%)

= $ 38400

Depreciation for 2019 under double declining method

= $38400×40%

= $ 15360

So the statement d is incorrect

So the answer is D)

Depreciation expense for 2019 using the double declining balance method is $ 14400