Question :
81.Refer to the information above. Assume that in its financial : 1237684
81.Refer to the information above. Assume that in its financial statements, Victor uses straight-line depreciation and rounds depreciation for fractional years to the nearest whole month. Depreciation recognized on this equipment in 2014 and 2015 will be:
A. $23,333 in 2014 and $35,000 in 2015.
B. $40,000 in 2014 and $30,000 in 2015.
C. $20,000 in 2014 and $35,000 in 2015.
D. $26,250 in 2014 and $35,000 in 2015.
($160,000 – $20,000)/4 = $35,000 × 9/12 = $26,250 for 2014 and $35,000 for 2015
82.Refer to the information above. Assume that in its financial statements, Victor uses straight-line depreciation and the half-year convention. Depreciation recognized on this equipment in 2014 and 2015 will be:
A. $40,000 in 2014 and $30,000 in 2015.
B. $23,333 in 2014 and $30,000 in 2015.
C. $17,500 in 2014 and $35,000 in 2015.
D. $20,000 in 2014 and $35,000 in 2015.
($160,000 – $20,000)/4 = $35,000/2 = $17,500 for 2014 and $35,000 for 2015
83.Refer to the information above. If Victor uses straight-line depreciation with the half-year convention, the book value of the equipment at December 31, 2015 will be:
A. $90,000.
B. $107,500.
C. $106,667.
D. $105,000.
$160,000 – $17,500 – $35,000 = $107,500
On April 30, 2014, Tilton Products purchased machinery for $88,000. The useful life of this machinery is estimated at 8 years, with an $8,000 residual value.
84.Refer to the information above. Assume that in its financial statements, Tilton Products uses straight-line depreciation and the half-year convention. Depreciation expense recognized on this machinery in 2014 and 2015 will be:
A. $7,500 in 2014 and $11,000 in 2015.
B. $6,000 in 2014 and $12,000 in 2015.
C. $5,000 in 2014 and $10,000 in 2015.
D. $5,500 in 2014 and $11,000 in 2015.
($88,000 – $8,000)/8 = $10,000/2 = $5,000 in 2014 and $10,000 in 2015
85.Refer to the information above. Assume that in its financial statements, Tilton Products uses straight-line depreciation and rounds depreciation for fractional years to the nearest month. Depreciation expense recognized on this machinery in 2014 and 2015 will be:
A. $2,333 in 2014 and $7,000 in 2015.
B. $5,833 in 2014 and $10,000 in 2015.
C. $6,667 in 2014 and $10,000 in 2015.
D. $10,000 in 2014 and $10,000 in 2015.
($88,000 – $8,000) = $80,000/8 = $10,000 × 8/12 = $6,667 in 2014 and $10,000 in 2015
86.Refer to the information above. Assume that in its financial statements, Tilton Products uses the 200%-declining-balance method and the half-year convention. Depreciation expense in 2014 and 2015 will be:
A. $11,000 in 2014 and $19,250 in 2015.
B. $22,000 in 2014 and $12,571 in 2015.
C. $22,000 in 2014 and $7,857 in 2015.
D. $11,000 in 2014 and $22,000 in 2015.
$88,000 × 2/8 = $22,000/2 = $11,000 in 2014 and $77,000 × 2/8 = $19,250 in 2015
87.Refer to the information above. Assume that in its financial statements, Tilton Products uses the 150%-declining-balance method and the half-year convention. Depreciation expense in 2014 and 2015 will be:
A. $8,250 in 2014 and $14,953 in 2015.
B. $16,500 in 2014 and $12,964 in 2015.
C. $16,500 in 2014 and $16,500 in 2015.
D. $15,000 in 2014 and $11,786 in 2015.
($88,000 × 1.5/8) = $16,500/2 = $8,250 in 2014 and ($88,000 – $8,250) × 1.5/8 = $14,953 in 2015
88.Refer to the information above. In the year 2020, Tilton Products sells this machinery for $4,500. At the date of sale, the machinery had been depreciated by Tilton Products to its estimated residual value of $8,000. This sale results in:
A. A $3,500 loss in both the company’s financial statements and income tax return.
B. No gain or loss in either the financial statements or income tax return.
C. A $3,500 loss in the financial statements; a $3,500 gain in the income tax return.
D. A $3,500 loss in the financial statements, but no gain or loss in the income tax return.
$8,000 – $4,500 = $3,500
89.An accelerated depreciation method:
A. Results in reporting higher earnings every year.
B. Depreciates an asset over a shorter life than does the straight-line method.
C. Recognizes more depreciation expense in the early years of an asset’s useful life and less in the later years.
D. Is required for assets that become technologically obsolete before they physically wear out.
90.Accelerated depreciation methods are used primarily in:
A. Income tax returns.
B. The financial statements of small businesses.
C. The financial statements of publicly owned corporations.
D. Companies with computer-based accounting systems.
