Question 1

Martin Company purchases a machine at the beginning of the year at a cost of $60,000.The machine is depreciated using the straight-line method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value.
-The book value of the machine at the end of year 4 is:

Accepted Answer

The book value at the end of year 4 is the salvage value, as the machine has been fully depreciated over its useful life. The calculation for annual depreciation is (Cost - Salvage Value) / Useful Life = ($60,000 - $5,000) / 4 = $13,750 per year. After 4 years, the total depreciation is $13,750 * 4 = $55,000, leaving a book value of $5,000, which is the salvage value.

Question 2

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000.The machine is depreciated using the double-declining-balance method.
-The machine's useful life is estimated to be 5 years with a $4,000 salvage value.Depreciation expense in year 2 is:

Accepted Answer

To use the double-declining-balance method, first calculate the straight-line depreciation rate:
Straight-line rate = 1 / useful life = 1 / 5 = 0.2 or 20%
Double-declining-balance rate = 2 x Straight-line rate = 2 x 20% = 40%
Year 1 depreciation = Beginning book value x Double-declining-balance rate = $24,000 x 40% = $9,600
Year 2 depreciation = (Beginning book value - Year 1 depreciation) x Double-declining-balance rate = ($24,000 - $9,600) x 40% = $5,760
Therefore, the answer is D) $5,760.

Question 3

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000.The machine is depreciated using the double-declining-balance method.
-The machine's useful life is estimated to be 5 years with a $4,000 salvage value.The machine's book value at the end of year 2 is:

Accepted Answer

The double-declining-balance method depreciates an asset at twice the rate of straight-line depreciation. First, calculate the straight-line rate as 1 / 5 years = 20%. Double that for the declining balance method, which is 40%. Year 1 depreciation: $24,000 * 40% = $9,600, leaving a book value of $24,000 - $9,600 = $14,400. Year 2 depreciation: $14,400 * 40% = $5,760, leaving a book value of $14,400 - $5,760 = $8,640.

Question 4

Martin Company purchases a machine at the beginning of the year at a cost of $60,000.The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value.
-Depreciation expense in year 4 is:

Accepted Answer

The answer of Martin Company purchases a machine at the...

Question 5

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000.The machine is depreciated using the straight-line method.
-The machine's useful life is estimated to be 5 years with a $4,000 salvage value.Depreciation expense in year 2 is:

Accepted Answer

The depreciation expense is calculated by subtracting the salvage value from the cost and then dividing by the useful life. ($24,000 - $4,000) / 5 = $4,000 per year.

Question 6

Flask Company reports net sales of $4,315 million; cost of goods sold of $2,808 million; net income of $283 million; and average total assets of $2,136.Compute its total asset turnover.

Accepted Answer

The answer of Flask Company reports net sales of $4,315...

Question 7

Victory Company purchases office equipment at the beginning of the year at a cost of $15,000.The machine is depreciated using the straight-line method.The machine's useful life is estimated to be 7 years with a $1,000 salvage value.The journal entry to record the first year's depreciation is:

Accepted Answer

The straight-line method of depreciation requires an equal amount of depreciation expense each year, which can be calculated as (cost - salvage value) / useful life. In this case, the annual depreciation expense is ($15,000 - $1,000) / 7 = $2,000. The journal entry to record the first year's depreciation is to debit Depreciation Expense for $2,000 and credit Accumulated Depreciation for $2,000.

Question 8

Victory Company purchases office equipment at the beginning of the year at a cost of $15,000.The machine is depreciated using the straight-line method.The machine's useful life is estimated to be 7 years with a $1,000 salvage value.The book value at the end of 7 years is:

Accepted Answer

The book value at the end of 7 years is the salvage value, which is $1,000, because straight-line depreciation will depreciate the asset down to its estimated salvage value over its useful life.

Question 9

Ngu owns equipment that cost $93,500 with accumulated depreciation of $64,000.Ngu asks $35,000 for the equipment but sells the equipment for $33,000.Compute the amount of gain or loss on the sale.

Accepted Answer

The answer of Ngu owns equipment that cost $93,500 with...

Question 10

Martin Company purchases a machine at the beginning of the year at a cost of $60,000.The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value.
-The machine's book value at the end of year 3 is:

Accepted Answer

The double-declining-balance method of depreciation involves doubling the straight-line rate of depreciation. For a machine with a useful life of 4 years, the straight-line depreciation rate is 25% (100% / 4 years). Doubling this rate gives a depreciation rate of 50% per year. However, depreciation stops when the book value reaches the salvage value. Year 1 depreciation: $60,000 * 50% = $30,000. Book value at end of Year 1: $60,000 - $30,000 = $30,000.Year 2 depreciation: $30,000 * 50% = $15,000. Book value at end of Year 2: $30,000 - $15,000 = $15,000.Year 3 depreciation: Since depreciating $15,000 by 50% would bring the book value below the salvage value of $5,000, the depreciation in Year 3 is calculated to bring the book value down to the salvage value. Therefore, the depreciation in Year 3 is $15,000 - $5,000 = $10,000, bringing the book value to $5,000, not $7,500. However, given the options and the common mistake in calculation, the closest correct answer based on the method described would be $7,500, indicating a possible misunderstanding in the calculation or a misprint in the options. The correct calculation should lead to a book value equal to the salvage value after the final year of depreciation, which would be $5,000 at the end of Year 3, but this option is not provided. Given the options and typical calculation method, D would be selected, but with the understanding that there seems to be a discrepancy in the expected outcome based on the double-declining balance method's application.

Question 11

Define plant assets and identify the four primary issues in accounting for them.

Accepted Answer

The answer of Define plant assets and identify the four...

Question 12

Gaston owns equipment that cost $90,500 with accumulated depreciation of $61,000.Gaston sells the equipment for $26,000.Which of the following would not be part of the journal entry to record the disposal of the equipment?

Accepted Answer

The correct journal entry to record the disposal of equipment includes removing the equipment at its original cost (Credit Equipment $90,500), removing the accumulated depreciation (Debit Accumulated Depreciation $61,000), recording the cash received (Debit Cash $26,000), and recognizing a loss if the sale proceeds are less than the book value of the asset. In this case, the book value of the equipment is $90,500 - $61,000 = $29,500, and it was sold for $26,000, resulting in a loss of $3,500 (Debit Loss on Disposal of Equipment $3,500). Therefore, crediting a gain on disposal of equipment would not be correct since the equipment was sold at a loss, not a gain.

Question 13

Martin Company purchases a machine at the beginning of the year at a cost of $60,000.The machine is depreciated using the straight-line method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value.
-Depreciation expense in year 4 is:

Accepted Answer

First, we need to calculate the annual depreciation expense using the straight-line method:
Depreciation Expense = (Cost - Salvage Value) / Useful Life
Depreciation Expense = ($60,000 - $5,000) / 4
Depreciation Expense = $13,750

Since the machine is being depreciated using the straight-line method, the annual depreciation expense is the same for each year. Therefore, the depreciation expense in year 4 will still be $13,750. So, the correct answer is B).

Question 14

Riverboat Adventures pays $310,000 plus $15,000 in closing costs to buy out a competitor.The real estate consists of land appraised at $35,000,a building appraised at $105,000,and paddleboats appraised at $210,000.Compute the cost that should be allocated to the building.

Accepted Answer

The answer of Riverboat Adventures pays $310,000 plus $15,000 in...

Question 15

What is depreciation of plant assets? What are the factors necessary in computing depreciation?

Accepted Answer

The answer of What is depreciation of plant assets? What...

Question 16

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000.The machine is depreciated using the units-of-production method.The company estimates it will use the machine for 5 years,during which time it anticipates producing 40,000 units.The machine is estimated to have a $4,000 salvage value.The company produces 9,000 units in year 1 and 6,000 units in year 2.Depreciation expense in year 2 is:

Accepted Answer

The answer of Mohr Company purchases a machine at the...

Question 17

Riverboat Adventures pays $310,000 plus $15,000 in closing costs to buy out a competitor.The real estate consists of land appraised at $35,000,a building appraised at $105,000,and paddleboats appraised at $210,000.Compute the cost that should be allocated to the land.

Accepted Answer

To allocate the cost of the real estate, we need to determine the percentage of the total appraised value that each component represents:

Land = $35,000 / ($35,000 + $105,000 + $210,000) = 0.125 or 12.5%

Building = $105,000 / ($35,000 + $105,000 + $210,000) = 0.375 or 37.5%

Paddleboats = $210,000 / ($35,000 + $105,000 + $210,000) = 0.5 or 50%

Next, we need to apply these percentages to the total cost of the acquisition:

Land cost = 0.125 x ($310,000 + $15,000) = $32,500

Therefore, the cost that should be allocated to the land is $32,500. Hence, option C is the correct answer.

Question 18

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000.The machine is depreciated using the straight-line method.
-The machine's useful life is estimated to be 5 years with a $4,000 salvage value.The book value of the machine at the end of year 2 is:

Accepted Answer

The answer of Mohr Company purchases a machine at the...

Question 19

How is the cost computed for individual assets purchased as a lump-sum?

Accepted Answer

The answer of How is the cost computed for individual...

Question 20

On April 1,Year 1,Astor Corp.purchased and placed a plant asset in service.The following information is available regarding the plant asset:
 Make the necessary adjusting journal entries at December 31,Year 1,and December 31,Year 2 to record depreciation for each year under the straight-line depreciation method.

Accepted Answer

The answer of On April 1,Year 1,Astor Corp.purchased and placed...

Quiz 8: Accounting for Long-Term Assets

Martin Company purchases a machine at the beginning of the year at a cost of $60,000.The machine is depreciated using the straight-line method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value. -The book value of the machine at the end of year 4 is:

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000.The machine is depreciated using the double-declining-balance method. -The machine's useful life is estimated to be 5 years with a $4,000 salvage value.Depreciation expense in year 2 is:

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000.The machine is depreciated using the double-declining-balance method. -The machine's useful life is estimated to be 5 years with a $4,000 salvage value.The machine's book value at the end of year 2 is:

Martin Company purchases a machine at the beginning of the year at a cost of $60,000.The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value. -Depreciation expense in year 4 is:

Mohr Company purchases a machine at the beginning of the year at a cost of $24,000.The machine is depreciated using the straight-line method. -The machine's useful life is estimated to be 5 years with a $4,000 salvage value.Depreciation expense in year 2 is: