Question : On April 2, 2009, Victor, Inc. acquired a new piece : 1229812

On April 2, 2009, Victor, Inc. acquired a new piece of filtering equipment. The cost of the equipment was $160,000 with a residual value of $20,000 at the end of its estimated useful lifetime of 4 years.

94. 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 2009 and 2010 will be: 
A. $23,333 in 2009 and $35,000 in 2010.
B. $40,000 in 2009 and $30,000 in 2010.
C. $20,000 in 2009 and $35,000 in 2010.
D. $26,250 in 2009 and $35,000 in 2010.

95. 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 2009 and 2010 will be: 
A. $40,000 in 2009 and $30,000 in 2010.
B. $23,333 in 2009 and $30,000 in 2010.
C. $17,500 in 2009 and $35,000 in 2010.
D. $20,000 in 2009 and $35,000 in 2010.

96. 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, 2010 will be: 
A. $90,000.
B. $107,500.
C. $106,667.
D. $105,000.

97. Machinery acquired new on January 1 at a cost of $80,000 was estimated to have a useful life of 10 years and a residual salvage value of $20,000. Straight-line depreciation was used. On January 1, following six full years of use of the machinery, management decided that the estimate of useful life had been too long and that the machinery would have to be retired after three years, that is, at the end of the ninth year of service. Under this revised estimate, the depreciation expense for the seventh year of use would be: 
A. $8,000.
B. $10,000.
C. $13,000.
D. $24,000.

98. Clark Imports sold a depreciable plant asset for cash of $35,000. The accumulated depreciation amounted to $70,000, and a loss of $5,000 was recognized on the sale. Under these circumstances, the original cost of the asset must have been: 
A. $65,000.
B. $75,000.
C. $100,000.
D. $110,000.

99. Mayer Instrumentation sold a depreciable asset for cash of $300,000. The original cost of the asset was $1,200,000. Mayer recognized a gain of $45,000 on the sale. What was the amount of accumulated depreciation on the asset at the time of its sale? 
A. $945,000.
B. $255,000.
C. $1,155,000.
D. $990,000.

100. Suffolk Associates sold office furniture for cash of $42,000. The accumulated depreciation at the date of sale amounted to $38,000, and a gain of $18,000 was recognized on the sale. The original cost of the asset must have been: 
A. $31,000.
B. $62,000.
C. $84,000.
D. $59,000.

101. Total stockholders’ equity of Tucker Company is $4,000,000. The fair market value of Tucker’s net identifiable assets (assets less liabilities) is $5,000,000. Empire Corporation makes an offer to purchase Tucker’s entire business for $5,800,000. In this situation: 
A. Tucker Company should report goodwill of $800,000 in its balance sheet.
B. Tucker Company should report goodwill of $1,800,000 in its balance sheet.
C. Empire Corporation is willing to pay $1,800,000 for goodwill generated by Tucker, and Empire will report this goodwill in its balance sheet if the purchase is finalized.
D. Empire Corporation is willing to pay $800,000 for goodwill generated by Tucker, and Empire will report this goodwill in its balance sheet if the purchase is finalized.

102. Early in the current year, Tokay Co. purchased the Silverton Mine at a cost of $20,000,000. The mine was estimated to contain 200,000 tons of ore and to have a residual value of $5,000,000 after mining operations are completed. During the year, 105,000 tons of ore were removed from the mine. At year-end, the book value of the mine (cost minus accumulated depletion) is: 
A. $15,000,000.
B. $12,125,000.
C. $7,875,000.
D. Less than $10,000,000.

103. In February 2009, Brilliant Industries purchased the Topaz Mine at a cost of $10,000,000. The mine is estimated to contain 500,000 carats of stone and to have a residual value of $500,000 after mining operations are completed. During 2009, 50,000 carats of stone were removed from the mine and sold. In this situation: 
A. The book value of the mine is $9,000,000 at the end of 2009.
B. The amount of depletion deducted from revenue during 2009 is $950,000.
C. The amount of depletion deducted from revenue during 2009 is $1,000,000.
D. The mine is classified as an intangible asset and amortized over a period not to exceed 40 years.