Question 1

On June 30,2018,Clooney Printers purchased a printer for $60,000.It expects the printer to last for four years and have a residual value of $9000.Compute the depreciation expense on the printer for the year ended December 31,2018,using the straight-line method.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

Accepted Answer

Depreciation per year = (Cost - Residual value) / Useful life
Depreciation for the first year = (($60,000 - $9000) / 4) × (6 /12) = $6375

Question 2

When a company makes an accounting change in estimate,Generally Accepted Accounting Principles require that the company make changes to financial statements of prior years.

Accepted Answer

Changes in accounting estimates are applied prospectively and do not require adjustments to prior period financial statements.

Question 3

On January 1,2019,Sapphire Manufacturing Company purchased a machine for $40,000,000.The company expects to use the machine for 24,000 hours over the next six years.The estimated residual value of the machine at the end of the sixth year is $40,000.The schedule of usage of the machine is below.
 $$\begin{array} { | r | c | } 
\hline \text { Year } & \text { Usage } \
\hline 1 & 4,500 \
\hline 2 & 6,000 \
\hline 3 & 5,200 \
\hline 4 & 4,300 \
\hline 5 & 2,000 \
\hline 6 & 2,000 \
\hline
\end{array}$$ Prepare the depreciation schedule using the units-of-production method of depreciation.

Accepted Answer

The answer of On January 1,2019,Sapphire Manufacturing Company purchased a...

Question 4

If a business changes the estimated useful life,or estimated residual value,of a plant asset,depreciation expense must be recalculated.

Accepted Answer

If there is a change in the estimated useful life or estimated residual value of a plant asset, the depreciation expense must be adjusted or recalculated to reflect the updated information. This is necessary to ensure that the company's financial statements accurately reflect the true value and cost of its assets over time. Failure to make these adjustments can lead to inaccuracies in the company's financial reporting and may also impact its tax liabilities.

Question 5

If an asset is disposed of during the year,there is no need to calculate depreciation from the beginning of the year of disposal to the date of disposal.

Accepted Answer

Depreciation needs to be calculated from the beginning of the year up to the date of disposal to accurately reflect the asset's use and value reduction during that period.

Question 6

On January 1,2018,Dalton Manufacturing Company purchased a machine for $40,000,000.The company expects to use the machine for 24,000 hours over the next six years.The estimated residual value of the machine at the end of the sixth year is $40,000.The company used the machine for 3,600 hours in 2018 and 5,000 hours in 2019.Calculate depreciation expense for 2019 if the company uses the units-of-production method of depreciation.

Accepted Answer

The answer of On January 1,2018,Dalton Manufacturing Company purchased a...

Question 7

Which of the following is TRUE when the estimate of an asset's useful life is changed?

Accepted Answer

When the estimate of an asset's useful life is changed, the remaining depreciable book value will be spread over the asset's remaining life. This means that the depreciation expense for the remaining years will be adjusted accordingly, but there is no need to restate prior years' financial statements. Additionally, the new estimate of useful life should be applied in the current and future periods, rather than waiting until the last year of the asset's life. Therefore, options A and B are incorrect.

Question 8

George Company purchased a van on May 1,2018,for $800,000.Estimated life of the van was five years,and its estimated residual value was $80,000.George uses the straight-line method of depreciation.Prepare the journal entry to record the depreciation expense for 2018 on the van.Omit explanation.

Accepted Answer

The answer of George Company purchased a van on May...

Question 9

A truck costs $316,000 and is expected to be driven 116,000 miles during its five-year life.Residual value is expected to be zero.If the truck is driven 27,000 miles during the first year,how much depreciation should the business record under the units-of-production method? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

Accepted Answer

Depreciation per mile = $316,000 / $116,000 = $2.72
Depreciation for the first year = $2.72 × 27,000 = $73,440

Question 10

Hampton Company purchased a van on January 1,2018,for $800,000.Estimated life of the van was five years,and its estimated residual value was $90,000.Hampton uses the straight-line method of depreciation.Prepare the journal entry to record the depreciation expense for 2018 on the van.Omit explanation.

Accepted Answer

The answer of Hampton Company purchased a van on January...

Question 11

Carpenters Company,a manufacturing company,acquired equipment on January 1,2017 for $510,000.Estimated useful life of the equipment was seven years and the estimated residual value was $12,000.On January 1,2020,after using the equipment for three years,the total estimated useful life has been revised to nine total years.Residual value remains unchanged.The company uses the straight-line method of depreciation.Calculate depreciation expense for 2020.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

Accepted Answer

Straight-line depreciation = (Cost - Residual value) / Useful life
Straight-line depreciation = (510,000 - 12,000) / 7 = 71,142.86
Depreciation provided for first three years = 71,142.86 × 3 = $213,428.58
Revised depreciation for the remaining useful life = ($510,000 - $213,428.58 - $12,000) / 6 = $47,429

Question 12

On January 1,2019,a company acquired a truck for $600,000.The residual value was estimated to be $20,000.The truck can be driven for 50,000 miles over the next three years.The actual usage of the truck was 8,640 miles for the first year.Calculate the rate of depreciation to be applied and depreciation for the first year using the units-of-production method.(Do not round your intermediate calculations.)

Accepted Answer

The answer of On January 1,2019,a company acquired a truck...

Question 13

On January 1,2019,a company acquired a truck for $100,000.Residual value was estimated to be $20,000.The truck can be driven for 50,000 miles over the next three years.Actual usage of the truck was recorded as 8,640 miles for the first year.Give the journal entry to record depreciation for the first year calculated as per the units-of-production method.(Do not round your intermediate calculations.)

Accepted Answer

The answer of On January 1,2019,a company acquired a truck...

Question 14

A business,which has a calendar year accounting period,purchased an asset on March 1,2018.The business disposed of the asset on August 31,2019.For the calendar year 2019,depreciation should be calculated from January 1 to August 31.

Accepted Answer

For the calendar year 2019, depreciation should be calculated for the period the asset was in use, which is from January 1, 2019, to August 31, 2019, the date it was disposed of.

Question 15

On January 1,2018,Sport Planes Manufacturing Company purchased a machine for $40,000,000.The company expects to use the machine for 24,000 hours over the next six years.The estimated residual value of the machine at the end of the sixth year is $40,000.The company used the machine for 3,600 hours in 2018 and 5,000 hours in 2019.What is the book value of the machine at the end of year 2019 if the company uses double-declining-balance method of depreciation? (Round your intermediate calculations.)

Accepted Answer

The answer of On January 1,2018,Sport Planes Manufacturing Company purchased...

Question 16

Burton Company purchased a van on January 1,2018,for $800,000.Estimated life of the van was five years,and its estimated residual value was $90,000.Burton uses the straight-line method of depreciation.Prepare the journal entry to record the purchase of van for cash.Omit explanation.

Accepted Answer

The answer of Burton Company purchased a van on January...

Question 17

The cost of an asset is $10,000,000,and its residual value is $100,000.Estimated useful life of the asset is four years.Prepare the schedule of depreciation using the double-declining-balance method of accounting.

Accepted Answer

The answer of The cost of an asset is $10,000,000,and...

Question 18

Adkins Bakery uses the modified half-month convention to calculate depreciation expense in the year an asset is purchased or sold.Adkins has a calendar year accounting period and uses the straight-line method to compute depreciation expense.On March 17,2018,Adkins acquired equipment at a cost of $200,000.The equipment has a residual value of $45,000 and an estimated useful life of 3 years.What amount of depreciation expense will be recorded for the year ending December 31,2018? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

Accepted Answer

Depreciation for 2018 = ($200,000 - $45,000) / 3 years × 9 months / 12 months = $38,750

Question 19

On January 1,2018,Forrest Manufacturing Company purchased a machine for $40,000,000.The company expects to use the machine for 24,000 hours over the next six years.The estimated residual value of the machine at the end of the sixth year is $40,000.The company used the machine for 3,600 hours in 2018 and 5,000 hours in 2019.What is the depreciation expense for 2018 and 2019 if the company uses the double-declining-balance method of depreciation?

Accepted Answer

The answer of On January 1,2018,Forrest Manufacturing Company purchased a...

Question 20

Ten O'Clock Company purchased a van on January 1,2018,for $800,000.Estimated life of the van was five years,and its estimated residual value was $90,000.Ten O'Clock uses the straight-line method of depreciation.Prepare the depreciation schedule.

Accepted Answer

The answer of Ten O'Clock Company purchased a van on...

Quiz 10: Plant Assets,natural Resources,and Intangibles