Question

SCAN Vvins Mui0z Chater9 g Phe conay aid s on dcteter1, mi tr s38 oc0 anel eest aaional 52 00o ha i aevy inad nawet vake 35 000 ard te exteeted ie is 10 vear Cakudate the depracatnesene re year ended tecember . 3 ur deprecn A 875 1.pas ,so0 t 38 000- 000 3600 ecovr the esene n with a enal etry Accumlated Depreciation as Depreiatn Experae 675 Acumolated Depreclenion 1,115 Depreciatime tsparoe 1.030 nepreciation Ereese 1,s0 Acmuiated Degrecietn 3.500 Deprecietion Expenue R7s Accumuacd Depreciation 875 12. Cavulate e deprecietion expenie ov the vear ended fecember 31, 2011 using the Double Declining Ralance method 4.500 2,000 38/000 8000 1035 Calculate the depreciarion expense for the year ended December 31, 2012 using the Doutble 4. Dechning Balance method 15,000 A B 12,800 C 7.600 D 13,500 5. The company has an old truck (original cost $30,000, book value S8,000) which is traded in for a new truck. The new truck has a market value of $50,000. The company pays 53,000 and signs a note payable for $40,000 Make the journal entry to record this transaction. A Debit New Truck 50.000, Accumulated Depreciation 22,000, Loss 1,000; Credit Old Truck 30,000, Cash 3,000 and Nates Payable 40,000 B. Debit New Truck 50.000, Accumulated Depreciation 35,000; Credit Old Truck 40,000, Notes Payable 40,000, Cash 3,000, Gain 2,000 Debit New Truck 50,000, Accumulated Depretiation 5,000, Loss 28,000; Credit Old Truck 40,000, Note Payable 40,000, Cash 3,000 D. Cannot do a journal entry to record an old truck and a new truck Intangible assets differ from property, plant and equipment assets in that they lack physical 6. substance. A. True 8. False

This is chapter 9 from Accounting 2301.

The company purchased equipment on October 1, 2011 for $38,000 and paid an additional $2,000 to have it properly installed. Residual value is $5,000 and the estimated life is 10 years.
1. Calculate the depreciation expense for the year ended December 31, 2011 using straight line depreciation.
A. 875
B. 1,035
C. 3,500
D. 2,000
2. Record the expense in #1 with a journal entry.
A. Accumulated Depreciation 875; Depreciation Expense 875.
B. Accumulated Depreciation 1,035; Depreciation Expense 1,035.
C. Depreciation Expense 3,500; Accumulated Depreciation 3,500.
D. Depreciation Expense 875; Accumulated Depreciation 875.
3. Calculated the depreciation expense for the year ended December 31, 2011 using the Double Declining Balance method.
A. 3,500
B. 2,000
C. 8,000
D. 1,035
4. Calculate the depreciation expense for the year ended December 31, 2012 using the Double Declining Balance method.
A. 15,000
B. 12,800
C. 7,600
D. 13,500
5. The company has an old truck (original cost $30,000, book value $8,000) which is traded in for a new truck. The new truck has a market value of $50,000. The company pays $3,000 and signs a note payable for $40,000. Make the journal entry to record this transaction.
A. Debit New Truck 50,000, Accumulated Depreciation 22,000, Loss 1,000; Credit Old Truck 30,000, Cash 3,000 and Notes Payable 40,000.

B. Debit New Truck 50,000, Accumulated Depreciation 35,000; Credit Old Truck 40,000, Notes Payable 40,000, Cash 3,000, Gain 2,000.

C. Debit New Truck 50,000, Accumulated Depreciation 5,000, Loss 28,000; Credit Old Truck 40,000, Note Payable 40,000, Cash 3,000.

D. Cannot do a journal entry to record an old truck and a new truck.

Answer 1

$40.000 1 Cost of asset 2 Estimated useful life (years) 3 Residual value 10 $5,000 5 1 6 Depreciation expense for 2011 7 Thus, the correct option is 'A. $875'. $875 8 9 2 The recording of depreciation expense would include a debit to depreciation 10 expense for $875 and credit to accumulated depreciation for $875. Thus, the correct option is 'D. Depreciation Expense 875; Accumulated 11 Depreciation 875'. 13 3 14 Double declining depreciation rate 15 Depreciation expense for 2011 16 Thus, the correct option is 'B. $2,000'. 20.00% $2.000 18 4 19 Depreciation expense for 2012 20 Thus, the correct option is 'C. $7,600'. $7,600 5. The correct option is 'A. A. Debit New Truck 50,000, Accumulated Depreciation 22,000, Loss 1,000; Credit Old Truck 30,000, Cash 3,000 and Notes Payable 40,000?. The value of new truck is $50,000, thus it would be debited by $50,000. Accumulated depreciation for old truck would be debited by $22,000 ($30,000 - $8.000). Old truck would be credited for its cost i.e. $30,000. The cash paid would be credited by $3,000. The notes payable would also be credited by $40,000. The loss on exchange would be debited by $1,000 ($30,000+ $3,000+ $40,000 - $50,000 - $22.000).

Calculations are shown below: 1=38000+2000 1 Cost of asset 2 Estimated useful life (years) 3 Residual value 10 5000 5 1 6 Depreciation expense for 2011 7 Thus, the correct option is 'A. $875'. =B1-B3)/B2)*(3/12) 9 2 The recording of depreciation expense would include a debit to depreciation 10 expense for $875 and credit to accumulated depreciation for $875. Thus, the correct option is 'D. Depreciation Expense 875; Accumulated 11 Depreciation 875'. 12 13 3 14 Double declining depreciation rate =(1/B2)*2 15 Depreciation expense for 2011 1=(B1*B14)*(3/12) 16 Thus, the correct option is 'B. $2,000'. 17 18 4 19 Depreciation expense for 2012 =(B1-B15)*B14 20 Thus, the correct option is 'C. $7,600'.