Intermediate Accounting Final Prep

A company purchased a delivery van for $28,000 with a salvage value of $3,000 on September 1, Year 1. It has an estimated useful life of 5 years. Using the straight-line method, how much depreciation expense should the company recognize on December 31, Year 1?

$1,667

An employee earned $37,000 during the year working for an employer when the maximum limit for Social Security was $118,500. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The employee's annual FICA taxes amount is:

$2,830.50

Peavey Enterprises purchased a depreciable asset for $22,000 on April 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $2,000, Peavey Enterprises should recognize depreciation expense in Year 2 in the amount of:

$5,000

On December 1, Victoria Company signed a 90-day, 6% note payable, with a face value of $15,000. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

$75

A company purchased property for $100,000. The property included a building, a parking lot, and land. The building was appraised at $62,000; the land at $35,000, and the parking lot at $18,000. Land should be recorded in the accounting records with an allocated cost of:

30,435

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

544

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the first year of its useful life using the double-declining-balance method?

680

Salvage value is:

An estimate of the asset's value at the end of its benefit period.

Amounts received in advance from customers for future products or services:

Are liabilities

The total cost of an asset less its accumulated depreciation is called:

Book Value

An asset's book value is $18,000 on December 31, Year 5. The asset has been depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 5 for $15,000, the company should record:

Cash 15,000 Loss 3,000 Equip 18,000

Martinez owns an asset that cost $87,000 with accumulated depreciation of $40,000. The company sells the equipment for cash of $42,000. At the time of sale, the company should record:

Cash 42,000 Acc Dep 40,000 Loss 5,000 Asset 87,000

A company sold equipment that originally cost $100,000 for $60,000 cash. The accumulated depreciation on the equipment was $40,000. The company should recognize a gain or loss of:

Cash 60,000 Acc Dep 40,000 Equip 100,000

During June, Vixen Company sells $850,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 3% of the selling price. Customers returned $14,000 of merchandise for warranty replacement during the month. The entry to settle the customer warranties is:

Debit Estimated Warranty Liability $14,000; credit Merchandise Inventory $14,000.

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.)

Debit Interest Expense, $120; credit Interest Payable, $120.

During June, Vixen Company sells $850,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 3% of the selling price. Customers returned $14,000 of merchandise for warranty replacement during the month. The entry to record the estimated warranty provision at the end of the month is:

Debit Warranty Expense $25,500; credit Estimated Warranty Liability $25,500

If land is purchased as a building site, the cost of removing existing structures is not charged to the Land account.

False

Total asset cost plus depreciation expense equals book value.

False

The Wage and Tax Statement given to each employee annually is:

Form W-2

A benefit of using an accelerated depreciation method is that:

It yields larger depreciation expense in the early years of an asset's life.

Which of the following is not classified as plant assets

Patent

Contingent liabilities are recorded or disclosed unless they are:

Remote

FICA taxes include:

Social Security and Medicare taxes.

A patent is an exclusive right granted to its owner. It is depreciated over its legal or economic life, whichever is shorter

Truth