Question

1. Machinery was purchased on January 1 for $73,500.00. The machinery has an estimated life of seven years and an estimated salvage value of $9,000. Double-declining-balance depreciation for the second year would be (round calculations to the nearest dollar):

a.$16,000

b.$15,000

c.$14,500

d.$14,000

2. A machine with a cost of $52,300 has an estimated residual value of $3,262 and an estimated life of 5 years or 17,412 hours. What is the amount of depreciation for the second full year, using the double-declining-balance method?

a.$12,552

b.$19,615

c.$20,920

d.$10,460

3. A building with an appraisal value of $135,757 is made available at an offer price of $158,563. The purchaser acquires the property for $34,867 in cash, a 90-day note payable for $23,496, and a mortgage amounting to $58,384. The cost basis recorded in the buyer's accounting records to recognize this purchase is

a.$158,563

b.$135,757

c.$123,696

d.$116,747

4. A machine with a cost of $135,000 has an estimated residual value of $15,000 and an estimated life of 6 years or 15,000 hours. It is to be depreciated by the units-of-activity method. What is the amount of depreciation for the second full year, during which the machine was used 5,100 hours?

a.$51,000

b.$40,800

c.$25,800

d.$5,100

5. On December 31, Strike Company has decided to discard one of its batting cages. The equipment had an initial cost of $205,000 and has accumulated depreciation of $184,500. Depreciation has been recorded up to the end of the year. Which of the following will be included in the entry to record the disposal?

a.Equipment, credit, $205,000

b.Gain on Disposal of Asset, credit, $20,500

c.Loss on Disposal of Asset, debit, $184,500

d.Accumulated Depreciation, debit, $205,000

6. Equipment with a cost of $154,821 has an estimated residual value of $8,049 and an estimated life of 4 years or 15,860 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used for 3,136 hours?

a.$36,693.00

b.$29,021.25

c.$38,705.25

d.$29,068.05

7.

Computer equipment was acquired at the beginning of the year at a cost of $58,800. It had an estimated residual value of $4,800 and an estimated useful life of five years. Determine the (a) depreciable cost, (b) straight-line rate, and (c) annual straight-line depreciation.

a. Depreciable cost	$
b. Straight-line rate		%
c. Annual straight-line depreciation	$

Answer 1

1)
	Depreciation rate under straight line = 1/7 years =14.285%
	Depreciation under double decling method =14.285*2 =28.57%
	Depreciation Schedule
	Year	opening balance	Depreciation @28.57%	Accumulated depreciation	Closing balance
	1	$                    73,500	$                               20,999	$                                       20,999	$         52,501
	2	$                    52,501	$                               15,000	$                                       35,998	$         37,502
	3	$                    37,502	$                               10,714	$                                       46,713	$         26,787
	4	$                    26,787	$                                 7,653	$                                       54,366	$         19,134
	5	$                    19,134	$                                 5,467	$                                       59,832	$         13,668
	6	$                    13,668	$                                 3,905	$                                       63,737	$           9,763
	7	$                       9,763	$                                 2,789	$                                       66,526	$           6,974
	Correct Option: b
2)	Depreciation rate under straight line = 1/5years =20%
	Depreciation under double decling method =20%*2 =40%
	Depreciation Schedule
	Year	opening balance	Depreciation @40%	Accumulated depreciation	Closing balance
	1	$                    52,300	$                               20,920	$                                       20,920	$         31,380
	2	$                    31,380	$                               12,552	$                                       33,472	$         18,828
	3	$                    18,828	$                                 7,531	$                                       41,003	$         11,297
	4	$                    11,297	$                                 4,519	$                                       45,522	$           6,778
	5	$                       6,778	$                                 2,711	$                                       48,233	$           4,067
	Correct Option: a