acctg 8 - compute and record depreciation
On June 1, Harding Co. purchased a machine for $14,000 and estimates it will use the machine for five years with a $2,000 salvage value. Using the straight-line depreciation method, compute the machine's first year (partial) depreciation expense for June 1st through December 31st. Multiple choice question.
$1,400
Wen Co. purchased a building for $200,000. Wen paid $20,000 in lawyer and title fees. Wen also paid an additional $15,000 to modify the building in order to accommodate his business needs. Wen should record the cost of the building at:
$235,000
Nimo Co. purchased a machine for $12,000 and estimates it will use the machine for five-years with a $2,000 salvage value. Using the double declining-balance depreciation method, compute the machine's first year depreciation expense.
$4,800
Straight-line depreciation can be calculated by taking:
(cost minus salvage value)/useful life
Arc Co. purchased a piece of equipment for $25,000. At the end of the year, the book value of the equipment is $12,000. The salvage value is 0. How much is accumulated depreciation at the end of the period?
13000
Digg Co. installs a manufacturing machine in its factory at the beginning of the year at a cost of $36,000. The machine's useful life is estimated at 10 years, or 300,000 units of product, with a $6,000 salvage value. During its first year, the machine produces 14,000 units of product. Determine the machine's first year depreciation expense under the units-of-production method.
1400
On October 30, Cleo Co. purchased a machine for $26,000 and estimates it will use the machine for four years with a $2,000 salvage value. Using the straight-line depreciation method, compute the machine's first year partial depreciation expense for October 30 through December 31.
1500
Ring Co. owns a delivery van that was purchased two years ago for $25,000. Ring has depreciated the van for two years at a straight-line amount of $4,000 per year. The book value of this van at the end of the second year would be $
17000
On January 1, Enco Co. purchases a milling machine for $15,000. The machine is expected to last seven years and have a salvage value of $1,000. Assuming the company uses the straight-line method, depreciation expense should be $_____ per year
2000
On January 3, ATA Company purchases a copy machine for $11,500. The machine is expected to last five years and have a salvage value of $1,500. Compute depreciation expense for the first year, assuming the company uses the straight-line method.
2000
PT Co. purchased land and an existing building for $200,000. In addition, PT paid closing costs of $15,000. PT removed the building and regraded the land for a total cost of $35,000. PT should record the cost of the land for: Multiple choice question.
250000
Juno Co. purchased a machine for $10,000 and estimates it will use the machine for four years with a $2,000 salvage value. Using the double declining-balance depreciation method, compute the machine's first year depreciation expense. Multiple choice question. $4,000
5000
Rino Co. pays $35,000 for equipment. The machine's useful life is estimated at 10 years, or 50,000 units of product with a $5,000 salvage value. During the first year, the machine produced 12,000 units of product. How much depreciation expense will Rino record this first year based on the units-of-production depreciation method?
7200
Accumulated depreciation is reported on which of the following financial statements?
Balance sheet
Book value can be calculated by taking an asset's acquisition costs less its
accumulated depreciation
capital expenditures
are additional costs of plant assets that provide benefits extending beyond the current period and increase or improve the type or amount of service an asset provides.
ordinary repairs
are expenditures to keep an asset in normal, good operating condition
Accumulated depreciation is recorded on which of the following financial statements?
balance sheet
The asset's acquisition costs less its accumulated depreciation is called:
book value
The factors necessary to compute depreciation include all of the following, except:
book value other options were salvage value cost useful life
examples of revenue expenditures are
cleaning, repainting, adjustments and lubricants
is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use.
depreciation
ordinary repairs do not
extend an assets useful life or increase productivity beyond original expectation
A permanent decline in the fair value of an asset relative to its book value is called asset
impairment
A(n) _________ is a permanent decline in the market value of an asset relative to its book value.
impairment
Revenue expenditures expire
in the current period and are debited to expense accounts and matched with current revenues
The inability of a company's plant assets to meet its demands is called:
inadequacy
examples of ordinary repairs are
normal costs of cleaning, changing oil, replacing small parts of the machine
The term ______ refers to a plant asset that is in process of becoming outdated and no longer used.
obsolescence
ordinary repairs are
revenue expenditures costs are reported as expenses on the current period income statement
The method of depreciation that charges a varying amount to depreciation expense for each period of an asset's useful life depending on its usage is called the _________ method.
units-of-production
The ______ life of a plant asset is the length of time it is productively used in a company's operations
useful
the _______ life (also called service life) is the length of time the asset is productively used in a company's operations.
useful
Straight-line depreciation is calculated by taking cost minus (salvage/market)
value divided by useful life.
Accumulated depreciation is a_____ asset account (one that is linked with the plant asset account, but has an opposite normal balance) and is reported on the balance sheet.
contra
Which of the following factors determine depreciation?
cost salvage value useful life
examples of capital expenditures
roofing replacements, plant expansion, and major overhauls of machinery and equipment
another name for the useful life is
the service life
capital expenditures
cost of plant assets that provide benefits for longer than the current period they increase the asset on the balance sheet expenditures that increase the company's investment in plant assets
Revenue expenditure
costs of plant assets that do not material increase the plant asset's life or capabilities they are recorded as expenses in the current period's income statement The payment of an operating expense necessary to earn revenue
______ value, also called residual value or scrap value, is an estimate of the asset's value at the end of its benefit period.
salvage
value, also called residual value or scrap value, is an estimate of the asset's value at the end of its benefit period.
salvage
(cost minus salvage value)/useful life is the equation for
straight line depreciation
Depreciation is
the process of allocating to expense the cost of a plant asset over the accounting periods that benefit from its use.
______ is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use.
Depreciation
Which of the following items related to depreciating equipment would be found on a company's income statement?
Depreciation Expense - Equipment (answer) other options Accumulated Depreciation - Equipment Equipment Net Book Value
betterments are
Expenditures making a plant asset more efficient or productive.
Depreciation Expense is reported on which of the following financial statements?
Income statement
Depreciation expense is reported as a decrease in which of the following financial statements?
Income statement
extraordinary repairs
Major repairs that extend the useful life of a plant asset beyond prior expectations; treated as a capital expenditure.
True or false: The cost of a plant asset consists of all necessary and reasonable expenditures to acquire it and prepare it for its intended use.
True
