Question 1

Machinery was purchased on January 1 for $51,000.The machinery has an estimated life of 7 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)$6,000
B)$10,500
C)$10,929
D)$10,408

Accepted Answer

The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/7, so the double rate is 2/7. First-year depreciation is $51,000 * 2/7 = $14,571. The book value at the start of the second year is $51,000 - $14,571 = $36,429. Second-year depreciation is $36,429 * 2/7 = $10,408.

Question 2

Comment on the validity of the following statements."As an asset loses its ability to provide services,cash needs to be set aside to replace it.Depreciation accomplishes this goal."

Accepted Answer

The answer of Comment on the validity of the following...

Question 3

On December 31,Strike Company traded-in one of its batting cages for another one that has a cost of $500,000.Strike receives a trade-in allowance of $11,000.The old equipment had an initial cost of $215,000 and has accumulated depreciation of $185,000.Depreciation has been recorded up to the end of the year.The difference will be paid in cash.What is the amount of the gain or loss on this transaction?
A)loss of $11,000
B)no loss or gain will be recorded
C)loss of $19,000
D)gain of $11,000

Accepted Answer

To begin with, we need to calculate the book value of the old batting cages. This is done by subtracting the accumulated depreciation from the initial cost:

Book value = Initial cost - Accumulated depreciation
Book value = $215,000 - $185,000
Book value = $30,000

Next, we need to calculate the gain or loss on the trade-in. This is done by comparing the book value of the old equipment with the trade-in allowance:

Gain or loss = Trade-in allowance - Book value
Gain or loss = $11,000 - $30,000
Gain or loss = -$19,000

Since the result is negative, it means that there is a loss on the transaction. Therefore, the correct answer is C, loss of $19,000.

Question 4

Falcon Company acquired an adjacent lot to construct a new warehouse,paying $40,000 and giving a short-term note for $410,000.Legal fees paid were $13,275,delinquent taxes assessed were $14,500,and fees paid to remove an old building from the land were $15,800.Materials salvaged from the demolition of the building were sold for $6,800.A contractor was paid $890,000 to construct the new warehouse.Determine the cost of the land to be reported on the balance sheet and show your work.

Accepted Answer

The answer of Falcon Company acquired an adjacent lot to...

Question 5

Copy equipment was acquired at the beginning of the year at a cost of $72,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years.It is estimated that the machine will output an estimated 1,000,000 copies.This year,315,000 copies were made.Determine the a depreciable cost,b depreciation rate,and c the units-of-output depreciation for the year.

Accepted Answer

The answer of Copy equipment was acquired at the beginning...

Question 6

When a company sells machinery at a price equal to its book value,this transaction would be recorded with an entry that would include the following:
A)debit Machinery; credit Cash and Accumulated Depreciation
B)debit Cash and Machinery; credit Accumulated Depreciation
C)debit Cash and Depreciation Expense; credit Accumulated Depreciation
D)debit Cash and Accumulated Depreciation; credit Machinery

Accepted Answer

When a company sells machinery at a price equal to its book value, the transaction is recorded by debiting Cash and Accumulated Depreciation and by crediting Machinery. This is because the machinery's book value is equal to its original cost less any accumulated depreciation, and selling it for the book value means that the company is receiving cash equal to the machinery's net book value. Therefore, the cash received is debited, and the accumulated depreciation is credited to remove that amount from the books. Finally, the machinery is also credited to remove it from the books.

Question 7

Journalize each of the following transactions:
a A wing costing $2,345,000 was added to the building.A new mortgage was issued for the cost.
b Equipment was upgraded to increase its capacity to produce widgets.The upgrade cost of
$11,500 was paid in cash.
c A major overhaul costing $8,000 on a machine increased the useful life by 4 years.The payment was made in cash.

Accepted Answer

The answer of Journalize each of the following transactions:
a A...

Question 8

What is the cost of the land,based upon the following data?

Accepted Answer

The answer of What is the cost of the land,based...

Question 9

The Bacon Company acquired new machinery with a price of $15,200 by trading in similar old machinery and paying $12,700.The old machinery originally cost $9,000 and had accumulated depreciation of $5,000.In recording this transaction,Bacon Company should record
A)a loss of $1,500
B)the new machinery at $16,700
C)a gain of $1,500
D)the new machinery at $12,700

Accepted Answer

The answer of The Bacon Company acquired new machinery with...

Question 10

On December 31,Strike Company sold one of its batting cages for $55,000.The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000.Depreciation has been taken up to the end of the year.What is the amount of the gain or loss on this transaction?
A)loss of $55,000
B)loss of $5,000
C)gain of $5,000
D)gain of $55,000

Accepted Answer

The equipment's book value is calculated as its initial cost ($310,000) minus accumulated depreciation ($260,000), which equals $50,000. Selling it for $55,000 results in a gain of $5,000 ($55,000 - $50,000).

Question 11

When a company discards machinery that is fully depreciated,this transaction would be recorded with the following entry
A)debit Accumulated Depreciation; credit Machinery
B)debit Machinery; credit Accumulated Depreciation
C)debit Depreciation Expense; credit Accumulated Depreciation
D)debit Cash; credit Accumulated Depreciation

Accepted Answer

When machinery is fully depreciated and discarded, the accumulated depreciation account is debited to remove the depreciation recorded over time, and the machinery account is credited to remove the asset from the books.

Question 12

When a company exchanges machinery and receives a trade-in allowance greater than the book value,this transaction would be recorded with which of the following entries assuming the exchange was considered to have commercial substance?
A)debit Machinery and Accumulated Depreciation; credit Machinery,Cash,and Gain on Exchange of Machinery
B)debit Cash and Machinery; credit Accumulated Depreciation and Machinery
C)debit Machinery and Accumulated Depreciation; credit Machinery and Cash
D)debit Cash and Machinery; credit Accumulated Depreciation

Accepted Answer

When a company receives a trade-in allowance greater than the book value, it means that they are receiving more than what the machinery is worth on their books. This results in a gain on the exchange, which needs to be recorded. The debit to Machinery and Accumulated Depreciation will remove the old machinery from the books, and the credit to Machinery and Cash will record the new machinery and any cash received. The gain on the exchange is recorded as a credit to recognize the increase in value.

Question 13

A number of major structural repairs completed at the beginning of the current fiscal year at a cost of $1,000,000 are expected to extend the life of a building 10 years beyond the original estimate.The original cost of the building was $6,552,000,and it has been depreciated by the straight-line method for 25 years.Estimated residual value is negligible and has been ignored.The related accumulated depreciation account after the depreciation adjustment at the end of the preceding fiscal year is $4,550,000.
a What has the amount of annual depreciation been in past years?
b What was the original life estimate of the building?
c To what account should the $1,000,000 be debited?
d What is the book value of the building after the extraordinary repairs have been made?
e What is the expected remaining life of the building after the extraordinary repairs have been made?
f What is the amount of straight-line depreciation for the current year,assuming that the repairs were completed at the very beginning of the current year? Round to the nearest dollar.

Accepted Answer

The answer of A number of major structural repairs completed...

Question 14

On December 31,Strike Company sold one of its batting cages for $50,000.The equipment had an original cost of $310,000 and has accumulated depreciation of $260,000.Depreciation has been recorded up to the end of the year.What is the amount of the gain or loss on this transaction?
A)no gain or loss
B)loss of $50,000
C)gain of $50,000
D)cannot be determined

Accepted Answer

The answer of On December 31,Strike Company sold one of...

Question 15

When a company exchanges machinery and receives a trade-in allowance less than the book value,this transaction would be recorded with which of the following entry?
A)debit Cash and Machinery; credit Accumulated Depreciation and Machinery
B)debit Machinery,Accumulated Depreciation,and Loss on Exchange of Machinery; credit Machinery and Cash
C)debit Cash and Machinery; credit Accumulated Depreciation
D)debit Machinery and Accumulated Depreciation; credit Machinery and Cash

Accepted Answer

When a company exchanges machinery and receives a trade-in allowance less than the book value, it results in a loss on exchange. Therefore, we need to debit the new machinery account, accumulated depreciation, and loss on exchange of machinery, and credit the old machinery account and cash. This will reflect the decrease in the value of the new machinery due to the loss incurred.

Question 16

On December 31,Strike Company has decided to discard one of its batting cages.The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000.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)Gain on Disposal of Asset Cr.,$50,000
B)Loss on Disposal of Asset Dr.,$260,000
C)Accumulated Depreciation Dr.,$310,000
D)Equipment Cr.,$310,000

Accepted Answer

The equipment is being discarded, so the Equipment account should be credited for its original cost of $310,000.

Question 17

The double-declining balance rate for calculating depreciation expense is determined by doubling the straight-line rate.Assuming that an asset has a useful life of 25 years,determine the rate to be used if using the double- declining-balance method.

Accepted Answer

The answer of The double-declining balance rate for calculating depreciation...

Question 18

On December 31,Strike Company sold one of its batting cages for $20,000.The equipment had an initial cost of $310,000 and had accumulated depreciation of $260,000.Depreciation has been recorded up to the end of the year.What is the amount of the gain or loss on this transaction?
A)gain of $20,000
B) gain of $30,000
C)loss  of $20,000
D)loss of $30,000

Accepted Answer

The answer of On December 31,Strike Company sold one of...

Question 19

When a company replaces a component of property,plant,and equipment,which statement below does not account for one of the steps in the process?
A)The asset cost of the replaced component is credited.
B)Book value of the replaced component is written off to depreciation expense.
C)The identifiable direct costs associated with the new component are expensed in the current period.
D)The identifiable direct costs associated with the new component are capitalized.

Accepted Answer

The answer of When a company replaces a component of...

Question 20

On April 15,Compton Co.paid $2,800 to upgrade a delivery truck and $125 for an oil change.Journalize the entries for the upgrade to delivery truck and oil change expenditures.

Accepted Answer

The answer of On April 15,Compton Co.paid $2,800 to upgrade...

Quiz 9: Fixed Assets and Intangible Assets

Machinery was purchased on January 1 for $51,000.The machinery has an estimated life of 7 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:

Comment on the validity of the following statements."As an asset loses its ability to provide services,cash needs to be set aside to replace it.Depreciation accomplishes this goal."

When a company sells machinery at a price equal to its book value,this transaction would be recorded with an entry that would include the following:

What is the cost of the land,based upon the following data?

The Bacon Company acquired new machinery with a price of $15,200 by trading in similar old machinery and paying $12,700.The old machinery originally cost $9,000 and had accumulated depreciation of $5,000.In recording this transaction,Bacon Company should record

On December 31,Strike Company sold one of its batting cages for $55,000.The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000.Depreciation has been taken up to the end of the year.What is the amount of the gain or loss on this transaction?

When a company discards machinery that is fully depreciated,this transaction would be recorded with the following entry

When a company exchanges machinery and receives a trade-in allowance greater than the book value,this transaction would be recorded with which of the following entries assuming the exchange was considered to have commercial substance?

On December 31,Strike Company sold one of its batting cages for $50,000.The equipment had an original cost of $310,000 and has accumulated depreciation of $260,000.Depreciation has been recorded up to the end of the year.What is the amount of the gain or loss on this transaction?

When a company exchanges machinery and receives a trade-in allowance less than the book value,this transaction would be recorded with which of the following entry?

The double-declining balance rate for calculating depreciation expense is determined by doubling the straight-line rate.Assuming that an asset has a useful life of 25 years,determine the rate to be used if using the double- declining-balance method.

On December 31,Strike Company sold one of its batting cages for $20,000.The equipment had an initial cost of $310,000 and had accumulated depreciation of $260,000.Depreciation has been recorded up to the end of the year.What is the amount of the gain or loss on this transaction?

When a company replaces a component of property,plant,and equipment,which statement below does not account for one of the steps in the process?

On April 15,Compton Co.paid $2,800 to upgrade a delivery truck and $125 for an oil change.Journalize the entries for the upgrade to delivery truck and oil change expenditures.