Sunday 10 November 2019

On January 1, 2019, Jubilee Corporation acquired equipment for $ 760,000. The estimated life of the equipment is 5 years or 37,000 hours. The estimated residual value is $ 20,000.

Land, buildings and equipment are acquired for a lump sum of $820,000. The market values of the three assets are, respectively, $260,000, $430,000 and $160,000.
What is the cost assigned to the equipment?
A. $194,353

B. $160,000

C. $154,353

D. $ 138,353


Answer
 C. $154,353
Book value equals the cost of the asset less the total accumulated depreciation.
A. True

B. False
Answer
True

Cramer Company purchased equipment on January 1, 2017 for $600,000.
The residual value is $60,000 and the estimated useful life is 1010 years. What is the Depreciation Expense for the year ending December 31, 2017, if the company uses the straight-line method?


A. $54,000

B. $36,000

C. 60,000

D. $ 40,000
Answer
$54,000

The cost of land may include the cost of any back property taxes that the purchaser pays.
A. True

B. False
Answer
True

The three depreciation methods allocate different amounts of depreciation to each period, but all result in the same total amount of depreciation over the life of the asset.
A. True

B. False
Answer
True

Which of the following costs would be capitalized related to Zume's pizza truck?
A.
Food inventory for truck

B.
Addition of 56 in-truck ovens


C.
Repair of the truck's transmission

D. Fuel for engine
Answer




 Addition of 56 in-truck ovens

George Company purchased equipment on January 1, 2017 for $660,000.  The residual value is $110,000 and the estimated useful life is 1010 years. What is the Depreciation Expense for the year ending December 31, 2017, if the company uses the straight-line method?
A. $110,000

B. $44,000

C. $36,667

D. $ 55,000
Answer
D. $ 55,000

On January 1, 2019, Wilson Company bought equipment for $ 740 comma 000. The estimated life of the equipment is 5 years or 105 comma 000 hours. The estimated residual value is $ 25 comma 000. What is the depreciation expense for 2019 if the company uses the double-declining-balance method of depreciation?
A. $143,000

B. $286,000

C. $148,000

D. $ 296,000
Answer
 D. $ 296,000
Cost minus residual value divided by useful life, in years, is the formula for the:
A.
Straight-line method


B.
Units-of-production method

C.
Double-declining-balance method

D.
Modified accelerated cost recovery method

Answer
A.
Straight-line method


In the year that Zume expenses the cost of replacement tires for the pizza truck, that cost will appear on Zume's:
A.
Income statement as an expense called REPAIRS EXPENSE
 
B.
Balance sheet as an asset called EQUIPMENT

 Answer
 B.
Balance sheet as an asset called EQUIPMENT


When compared to the other methods of depreciation, use of the double-declining-balance method of depreciation will result in depreciation expense that is:
A.
Higher in the earlier periods


B.
Approximately the same in earlier periods as with other methods

C.
The same from year to year

D.
Less in the earlier periods
Answer
A.
Higher in the earlier periods

 
Which of the following statements is true about calculating depreciation using the units-of-production method:
A.
A variable amount of depreciation is assigned to each unit of output

B.
Depreciation expense depends directly on the amount of output or usage


C.
The residual value at the end of the asset's useful life will always be zero

D.
The estimated residual value is not used with the units-of-production method
Answer
B.
Depreciation expense depends directly on the amount of output or usage

 
On January 1, 2019, Jubilee Corporation acquired equipment for $ 760,000. The estimated life of the equipment is 5 years or 37,000 hours. The estimated residual value is $ 20,000. If the company uses the units-of-production method of depreciation, what will be the debit to Depreciation Expense for the year ended December 31, 2019, assuming that during this period, the asset was used 5 comma 000 hours?
A. $148,000
 
B. $100,000


C. $102,703

D. $ 105,405
Answer
B. $100,000
 
Company A purchased a used piece of equipment. All of the following costs should be included in the cost of the equipment EXCEPT for:
A.
sales tax paid.
B.
maintenance costs after the equipment is up and running.

C.
installation costs.
D.
insurance while in transit.
Answer
 maintenance costs after the equipment is up and running.

Which of the following is NOT one of the three things needed to measure depreciation?
A.
Estimated residual value
B.
Estimated useful life
C.
Probability of obsolescence

D.
Cost 
Answer
 C.
Probability of obsolescence


 Which of the following statements is true about calculating depreciation using the units-of-production method:
A.
The residual value at the end of the asset's useful life will always be zero
B.
The estimated residual value is not used with the units-of-production method
C.
A variable amount of depreciation is assigned to each unit of output
D.
Depreciation expense depends directly on the amount of output or usage


Answer
D.
Depreciation expense depends directly on the amount of output or usage



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