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144)
A company purchased equipment valued at $66,000. It traded in old equipment for a $9,000
trade-in allowance and the company paid $57,000 cash with the trade-in. The old equipment cost
$44,000 and had accumulated depreciation of $36,000. This transaction has commercial substance.
What is the recorded value of the new equipment?
A) $66,000. B) $9,000. C) $65,000. D) $57,000. E) $8,000.
145)
Which of the following statements regarding increases in the value of plant assets under U.S.
GAAP and IFRS is true?
A)
IFRS prohibits upward asset revaluations.
B)
Under GAAP, a company can reverse an impairment and record that increase in income.
C)
U.S. GAAP prohibits companies from recording increases in the value of plant assets.
D)
U.S. GAAP allows companies to record increases in the value of plant assets.
E)
Under IFRS, an impairment increase beyond as asset's original cost is not recorded.
146)
Granite Company purchased a machine costing $120,000, terms 1/10, n/30. The machine was
shipped FOB shipping point and freight charges were $2,000. The machine requires special
mounting and wiring connections costing $10,000. When installing the machine, $1,300 in
damages occurred. Compute the cost recorded for this machine assuming Granite paid within the
discount period.
A) $129,800. B) $132,100. C) $130,800. D) $120,100. E) $118,800.
147)
Wickland Company installs a manufacturing machine in its production facility at the beginning of
the year at a cost of $87,000. The machine's useful life is estimated to be 5 years, or 400,000 units
of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units
of product. Determine the machines' second year depreciation under the straight-line method.
A) $20,880. B) $17,400. C) $16,900. D) $16,000. E) $18,379.
148)
Wickland Company installs a manufacturing machine in its production facility at the beginning of
the year at a cost of $87,000. The machine's useful life is estimated to be 5 years, or 400,000 units
of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units
of product. Determine the machines' second year depreciation under the double-declining-balance
method.
A) $17,400. B) $20,880. C) $16,000. D) $18,379. E) $16,900.
149)
Wickland Company installs a manufacturing machine in its production facility at the beginning of
the year at a cost of $87,000. The machine's useful life is estimated to be 5 years, or 400,000 units
of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units
of product. Determine the machines' second year depreciation under the units-of-production
method.
A) $16,000. B) $20,880. C) $17,400. D) $18,379. E) $16,900.
150)
Wickland Company installs a manufacturing machine in its production facility at the beginning of
the year at a cost of $87,000. The machine's useful life is estimated to be 5 years, or 400,000 units
of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units
of product. What journal entry would be needed to record the machines' second year depreciation
under the units-of-production method?
A)
Debit Depletion Expense $16,900; credit Accumulated Depletion $16,900.
B)
Debit Depreciation Expense $16,900; credit Accumulated Depreciation $16,900.
C)
Debit Depletion Expense $16,000; credit Accumulated Depletion $16,000.
D)
Debit Amortization Expense $16,900; credit Accumulated Amortization $16,900.
E)
Debit Depreciation Expense $16,000; credit Accumulated Depreciation $16,000.
151)
Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000.
The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000
salvage value. During its first year, the machine produces 64,500 units of product. Determine the
machines' first year depreciation under the straight-line method.
A) $27,000. B) $23,779. C) $25,800. D) $29,025. E) $24,000.
152)
Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000.
The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000
salvage value. During its first year, the machine produces 64,500 units of product. Determine the
machines' first year depreciation under the double-declining-balance method.
A) $48,000. B) $24,000. C) $66,000. D) $25,800. E) $54,000.
153)
Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000.
The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000
salvage value. During its first year, the machine produces 64,500 units of product. Determine the
machines' first year depreciation under the units-of-production method.
A) $54,000. B) $48,000. C) $24,000. D) $27,000. E) $25,800.
154)
Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000.
The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000
salvage value. During its first year, the machine produces 64,500 units of product. What journal
entry would be needed to record the machines' first year depreciation under the units-of-production
method?
A)
Debit Depletion Expense $29,025; credit Accumulated Depletion $29,025.
B)
Debit Depreciation Expense $25,800; credit Accumulated Depreciation $25,800.
C)
Debit Amortization Expense $24,000; credit Accumulated Amortization $24,000.
D)
Debit Depletion Expense $25,800; credit Accumulated Depletion $25,800.
E)
Debit Depreciation Expense $29,025; credit Accumulated Depreciation $29,025.
155)
Fortune Drilling Company acquires a mineral deposit at a cost of $5,900,000. It incurs additional
costs of $600,000 to access the deposit, which is estimated to contain 2,000,000 tons and is
expected to take 5 years to extract. Compute the depletion expense for the first year assuming
418,000 tons were mined.
A) $1,180,000.
B) $1,280,000.
C) $1,300,000.
D) $1,358,500.
E) $1,233,100.
156)
Fortune Drilling Company acquires a mineral deposit at a cost of $5,900,000. It incurs additional
costs of $600,000 to access the deposit, which is estimated to contain 2,000,000 tons and is
expected to take 5 years to extract. What journal entry would be needed to record the expense for
the first year assuming 418,000 tons were mined?
A)
Debit Depreciation Expense $1,358,500; credit Accumulated Depreciation $1,358,500.
B)
Debit Depreciation Expense $1,233,100; credit Accumulated Depreciation $1,233,100.
C)
Debit Depletion Expense $1,233,100; credit Accumulated Depletion $1,233,100.
D)
Debit Amortization Expense $1,358,500; credit Accumulated Amortization $1,358,500.
E)
Debit Depletion Expense $1,358,500; credit Accumulated Depletion $1,358,500.
157)
Bering Rock acquires a granite quarry at a cost of $590,000, which is estimated to contain 200,000
tons of granite and is expected to take 6 years to remove. Compute the depletion expense for the
first year assuming 38,000 tons were removed and sold.
A) $112,100. B) $12,881. C) $98,333. D) $93,158. E) $38,000.
158)
Bering Rock acquires a granite quarry at a cost of $590,000, which is estimated to contain 200,000
tons of granite and is expected to take 6 years to remove. What journal entry would be needed to
record the expense for the first year assuming 38,000 tons were removed and sold?
A)
Debit Depletion Expense $112,100; credit Accumulated Depletion $112,100.
B)
Debit Amortization Expense $112,100; credit Natural Resources $112,100.
C)
Debit Depletion Expense $93,158; credit Accumulated Depletion $93,158.
D)
Debit Depreciation Expense $93,158; credit Accumulated Depreciation $93,158.
E)
Debit Depreciation Expense $98,333; credit Accumulated Depreciation $98,333.
159)
Phoenix Agency leases office space for $7,000 per month. On January 3, Phoenix incurs $65,000
to improve the leased office space. These improvements are expected to yield benefits for 8 years.
Phoenix has 5 years remaining on its lease. Compute the amount of expense that should be
recorded the first year related to the improvements.
A) $65,000. B) $8,125. C) $6,000. D) $20,000. E) $13,000.
160)
Crestfield leases office space for $7,000 per month. On January 3, the company incurs $12,000 to
improve the leased office space. These improvements are expected to yield benefits for 10 years.
Crestfield has 4 years remaining on its lease. What journal entry would be needed to record the
expense for the first year related to the improvements?
A)
Debit Depletion Expense $3,000; credit Accumulated Depletion $3,000.
B)
Debit Depreciation Expense $1,200; credit Accumulated Depreciation $1,200.
C)
Debit Amortization Expense $1,200; credit Accumulated Amortization $1,200.
D)
Debit Amortization Expense $3,000; credit Accumulated Amortization $3,000.
E)
Debit Depletion Expense $12,000; credit Accumulated Depletion $12,000.
161)
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.
A) $5,500 loss.
B) $3,500 gain.
C) $5,500 gain.
D) $3,000 gain.
E) $3,500 loss.
162)
Gaston owns equipment that cost $90,500 with accumulated depreciation of $61,000. Gaston asks
$30,000 for the equipment but 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?
A)
Credit Gain on Disposal of Equipment $3,500.
B)
Debit Accumulated Depreciation $61,000.
C)
Debit Loss on Disposal of Equipment $3,500.
D)
Credit Equipment $90,500.
E)
Debit Cash $26,000.
163)
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.
A) 2.02. B) 1.31. C) .76. D) .13. E) .50.
164)
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.
A) $93,000. B) $105,000. C) $97,500. D) $140,000. E) $89,178.
