Question

Carlos Co, purchased building and land for $400,000 total. Individually, the land appraised for $84,000 and the building appraised for $336,000. How much of the purchase price should be allocated to the cost of the land? A. $ 75,000 B. $ 80,000 C. $ 84,000 D. $400,000 Planter Co. purchased a delivery van for $30,000 on January 1. The van has an estimated 5 year life with a residual value of $5,000. What would be the depreciation expense for this van in the first year if Planter uses the straight-line method? A. $5,000 B. $6,000 C. $25,000 D. $30,000 Bixby Co. purchased a forklift for $40,000 on July 1. The forklift has an estimated useful life of 20,000 usage hours with a residual value of $8,000. Bixby uses the units of production method of depreciation. If Bixby uses the forklift for 6,4000 hours during the first year, the depreciation expense on the forklift would be? A. $ 8,000 B. $10,240 C. $12,800 D. $ 40,000 The entry to record annual depreciation includes a: A. debit to Depreciation Expense. B. debit to Accumulated Depreciation. C. credit to Depreciation Expense. D. credit to the asset account.

Answer 1

2) Amount allocated to Land = 400000*84000/420000 = 80000

So answer is a) $80000

3) First year depreciation = (30000-5000)/5 = 5000

So answer is a) $5000

4) Depreciation per hour = (40000-8000/20000) = 1.60

Depreciation expense per year = 1.6*6400 = 10240

So answer is b) $10240

5) Annual depreciation expense entry

Date	account and explanation	Debit	Credit
	Depreciation expense	XXX
	Accumulated depreciation		XXX

So answer is a) Debit to depreciation expense