Question :
67.A change in an accounting estimate is:
A.Reflected in past financial : 1258960
67.A change in an accounting estimate is:
A.Reflected in past financial statements.
B.Reflected in future financial statements and also requires modification of past statements.
C.Reflected in current and future years’ financial statements, not in prior statements.
D.Not allowed under current accounting rules.
E.Considered an error in the financial statements.
68.When originally purchased, a vehicle costing $23,000 had an estimated useful life of 8 and an estimated salvage value of $1,500. After 4 years of straight-line depreciation, the asset’s total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. The depreciation expense in year 5 equals:
A.$5,375.00.
B.$2,687.50.
C.$5,543.75.
D.$10,750.00.
E.$2,856.25.
Accumulated Depreciation through the end of year 4:(Cost of Asset – Salvage Value)/Estimated Useful Life * Years Elapsed($23,000 – $1,500)/8 * 4 = $10,750Depreciation in Year 5 = (Cost of Asset – Accumulated Depreciation – Salvage Value)/Remaining Estimated Useful Life($23,000 – $10,750 – $1,500)/2 = $5,375
69.A company used straight-line depreciation for an item of equipment that cost $12,000, had a salvage value of $2,000 and a five-year useful life. After depreciating the asset for three complete years, the salvage value was reduced to $1,200 but its total useful life remained the same. Determine the amount of depreciation to be charged against the equipment during each of the remaining years of its useful life:
A.$1,000.
B.$1,800.
C.$5,400.
D.$2,400.
E.$2,000.
Accumulated Depreciation through the end of year 3: (Cost of Asset – Salvage Value)/Estimated Useful Life * Years Elapsed ($12,000 – $2,000)/5 * 3 = $6,000 Depreciation, years 4 through 5 = (Cost of Asset – Accumulated Depreciation – Salvage Value)/Remaining Estimated Useful Life ($12,000 – $6,000 – $1,200)/2 = $2,400
70.Beckman Enterprises purchased a depreciable asset on October 1, Year 1 at a cost of $100,000. The asset is expected to have a salvage value of $20,000 at the end of its five-year useful life. If the asset is depreciated on the double-declining-balance method, the asset’s book value on December 31, Year 2 will be:
A.$36,000
B.$42,000
C.$54,000
D.$16,000
E.$90,000
PeriodBOY BVDB RateDepreciation ExpenseEOY BV
Year 1100,00040%$40,000 * 3/12 = $10,000$90,000
Year 290,00040%36,00054,000
Accordingly, the asset’s book value at the end of Year 2 would be $54,000. BOY BV = Beginning of Year Book Value DB Rate = Declining Balance Rate of Depreciation (1/5 * 2) EOY BV = End of Year Book Value
71.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, what will be the amount of accumulated depreciation on this asset on December 31, Year 3?
A.$5,000
B.$15,000
C.$15,125
D.$20,000
E.$13,750
Year 1 [($22,000 – $2,000)/4] * 9/12 =$3,750
Year 2 ($22,000 – 2,000)/4 =$5,000
Year 3$5,000
Accumulated$13,750
72.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:
A.$10,000
B.$5,000
C.$5,500
D.$20,000
E.$9,250
Depreciation Expense = (Cost – Salvage Value)/Estimated Useful LifeDepreciation Expense = ($22,000 – $2,000)/4 = $5,000
73.The following information is available on a depreciable asset owned by Mutual Savings Bank:
Purchase dateJune 1, Year 1
Purchase price$85,000
Salvage value$10,000
Useful life10 years
Depreciation methodstraight-line
The asset’s book value is $70,000 on June 1, Year 3. On that date, management determines that the asset’s salvage value should be $5,000 rather than the original estimate of $10,000. Based on this information, the amount of depreciation expense the company should recognize during the last six months of Year 3 would be:
A.$8,125.00
B.$7,375.00
C.$4,062.50
D.$3,750.00
E.$7,812.50
[(Year 3 book value – revised salvage value)/useful life] * fraction of year = second half of Year 3 depreciation [($70,000 – $5,000)/8] * 6/12 = $4,062.50.
74.A benefit of using an accelerated depreciation method is that:
A.It is preferred by the tax code.
B.It is the simplest method to calculate.
C.It yields larger depreciation expense in the early years of an asset’s life.
D.It yields a higher income in the early years of the asset’s useful life.
E.The results are identical to straight-line depreciation.
75.The modified accelerated cost recovery system (MACRS):
A.Is included in the U.S. federal income tax rules for depreciating assets.
B.Is an outdated system that is no longer used by companies.
C.Is required for financial reporting.
D.Is identical to units of production depreciation.
E.Does not allow partial year depreciation.
76.The straight-line depreciation method and the double-declining-balance depreciation method:
A.Produce the same total depreciation over an asset’s useful life.
B.Produce the same depreciation expense each year.
C.Produce the same book value each year.
D.Are acceptable for tax purposes only.
E.Are the only acceptable methods of depreciation for financial reporting.
Submit file using Webcam PhotoWebcam PhotoSubmit file using Canvas FilesCanvas Files