Financial Accounting

Norwood, Inc. purchased a crane at a cost of $80,000. The crane has an estimated residual value of $5,000 and an estimated life of eight years, or 12,500 hours of operation. The crane was purchased on January 1, 2017, and was used 2,700 hours in 2017 and 2,600 hours in 2018.Refer to the information for Norwood, Inc.If Norwood uses the units-of-production method, what is the depreciation rate per hour for the equipment? a.$4.00 b.$7.50 c.$5.00 d.$6.00

ACTUAL COST = 80000 - 5000 = 75000. DEPRECIATION PER HOUR = ACTUAL COST / TOTAL HOURS OF OPERATION = 75000 / 12500 = $ 6.00 PER HOUR OF USE.

On December 1, 2017, Xeon Company bought land and an accompanying warehouse from Yen Company for $800,000. The fair market values of the land and the building at the time of purchase were $700,000 and $300,000, respectively. How much of the purchase price should Xeon Company allocate to the land, and how much should be allocated to the building? a.$560,000 and $240,000, respectively b.$700,000 and $300,000, respectively c.$500,000 and $300,000, respectively d.$457,143 and $342,857, respectively

Land: $800,000 × ($700,000/$1,000,000) = $560,000 Building: $800,000 × ($300,000/$1,000,000) = $240,000