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Exam 9: Accounting for Long-Lived and Intangible Assets

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Question 1

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Kaitlin Block Publishing, a textbook publishing firm, purchased a new machine for $120,000. This machine is expected to operate for 10 years, after which it will be sold for salvage value (estimated to be $9,000). How much will the first and second year's depreciation expense be under the double-declining-balance method?

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Double-declining-balance rate ...

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Question 2

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On July 1, 2018, Nanette Company purchased equipment for $216,000. Nanette uses straight-line depreciation and estimates a six-year useful life and a $36,000 salvage value. On December 31, 2021, the equipment is destroyed by fire. The equipment is not insured. The journal entry to record the equipment's destruction should reflect:

A) A $ 36,000 loss
B) A $111,000 loss
C) A $ 75,000 loss
D) A $105,000 loss

E) B) and C)
F) A) and D)

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Question 3

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Saul Company purchased a tractor at a cost of $120,000 on January 1, 2019. The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years. If Saul uses the straight-line method, what is the book value at January 1, 2023?

On April 30, 2019, TWC & Brothers sold some used equipment for $84,000. The accumulated depreciation on the equipment when sold was $96,000. TWC & Brothers properly recorded a $33,000 gain on the sale. The original cost of the equipment when it was purchased several years ago by TWC & Brothers must have been:

Helmut, Inc. purchased a truck on July 1, 2019, for $37,800. At that time, the truck's useful life was an estimated five years with no salvage value. Before the entry to record 2021 depreciation was made, the truck's estimated useful life was changed to four years with a $1,400 salvage value. Using straight-line depreciation, what is the 2021 depreciation expense?

Tidy Corporation purchased a depreciable asset for $1,560,000 on January 1, 2018. The estimated salvage value is $120,000, and the estimated useful life is 9 years. The straight-line method is used for depreciation. On January 1, 2021, Tidy changed its estimates to a total remaining useful life of 8 years with a salvage value of $200,000. What is 2018 depreciation expense?

On January 1, 2019, Ceramics, Inc. purchased a new machine for $480,000. Its estimated useful life is eight years with an expected salvage value of $36,000. Assuming double-declining balance depreciation, 2019 depreciation expense is:

Spencer Company purchased a tractor at a cost of $540,000. The tractor has an estimated salvage value of $60,000 and an estimated life of 8 years, or 12,000 hours of operation. The tractor was purchased on January 1, 2019 and was used 2,400 hours in 2019 and 2,200 hours in 2020. What amount will Spencer Company report as depreciation expense over the 8-year life of the equipment using straight-line depreciation?

On January 1, 2016, Chipmunk Company purchased new equipment for $440,000. The equipment had an estimated $40,000 salvage value at the end of its estimated ten-year useful life. Straight-line depreciation has been recorded. Before adjusting the accounts for 2022, Chipmunk extends the useful life of the equipment by four years and decreases the salvage value to $20,000. Required: a. Calculate the 2022 depreciation expense. b. What is the equipment's book value at the end of 2022 after recording the 2022 depreciation expense?

Several years ago, Beglen, Inc. purchased a computer costing $180,000, for which total depreciation of $140,000 has been recorded. Assuming that the computer is sold for $60,000 cash, the proper entry to record the sale is:

On January 1, 2019, Presto, Inc. purchased a new machine for $192,000. Its estimated useful life is 16 years with an expected salvage value of $32,000. Assuming double-declining balance depreciation, 2020 depreciation expense is:

Scheuller Company had machinery that had originally cost $246,000. The machinery was three years old and had been depreciated using the double-declining-balance method, over a five-year useful life with a residual value of $18,000. Answer each of the following independent questions: Required: a. If the company sold the machinery for $105,000, prepare a journal entry to record the sale. b. If the company sold the machinery for $48,000, prepare a journal entry to record the sale.

On April 30, 2019, Penny Products purchased machinery for 396,000. The useful life of this machinery is estimated at 5 years, with a $96,000 residual value. The company uses the double-declining-balance method. Depreciation expense for the fiscal year ending on December 31, 2020 will be:

On January 1, 2019, Shadow, Inc. purchased equipment for $54,000. Shadow uses straight-line depreciation and estimates a 10-year useful life and a $6,000 salvage value. On December 31, 2026, Shadow sells the equipment for $28,400. In recording this sale, Shadow should reflect:

Determine the 2019 asset turnover for Physics Laboratories using the financial statement information below:

Joy Machinery acquired a new machine on January 1, 2017 at a cost of $100,000, which was estimated to have a useful life of 10 years, and a salvage value of $40,000. Straight-line depreciation was used. On January 1, 2022, management decided that the estimate of useful life had been too long and that the machinery would have to be retired after two more years, (that is, at the end of the eighth year of service) , but would retain its original salvage value. Under this revised estimate, calculate the depreciation expense for the seventh year of use.

On April 1, 2019, Albert, Inc. acquired a new machine for $160,000. Its estimated useful life is eight years with an expected salvage value of $16,000. Assuming straight-line depreciation, 2019 depreciation expense is:

On January 1, 2019, Ivey Company purchased a bottle-capping machine for $160,000. During its useful life, the company expects that the machine will cap 1,500,000 bottles. The machine's expected salvage value is $10,000. During 2019, the machine capped 250,000 bottles and during 2020, the machine capped 300,000 bottles. Assuming units-of-production depreciation, 2020 depreciation expense is:

On January 1, 2019, Chelsea Company purchased for $180,000 a new machine that has an estimated useful life of ten years (or 550,000 stamping operations), after which the expected salvage value is $10,000. Under each of the following depreciation methods, calculate the depreciation expense for 2019. Required: a. Straight-line depreciation b. Double-declining balance depreciation c. Units-of-production depreciation, if 66,000 stamping operations were made in 2019

On April 1, 2019, Veronica, Inc. acquired a new machine for $480,000. Its estimated useful life is eight years with an expected salvage value of $48,000. Assuming straight-line depreciation, 2019 depreciation expense is: