Question :
51) On January 4, 2012, Peggy’s Cafe acquired equipment for : 1230206
51) On January 4, 2012, Peggy’s Cafe acquired equipment for $180,000. The estimated life of the equipment is 4 years or 42,500 hours. The estimated residual value is $10,000. What is the depreciation for 2012, if Peggy’s Cafe uses the asset 14,100 hours and uses the units-of-production method of depreciation?
A) $12,056
B) $56,400
C) $59,717
D) $170,000
52) On January 4, 2012, Peggy’s Cafe acquired equipment for $180,000. The estimated life of the equipment is 4 years or 42,500 hours. The estimated residual value is $10,000. What is the balance in the accumulated depreciation account at December 31, 2013 if the straight-line method is used?
A) $42,500
B) $45,000
C) $85,000
D) $90,000
53) On January 2, 2012, Hockey Skates, Inc., acquired equipment for $230,000. The estimated life of the equipment is 5 years. The estimated residual value is $30,000. What is the book value of the equipment on December 31, 2012, if Hockey Skates uses the double-declining-balance method of depreciation?
A) $92,000
B) $138,000
C) $150,000
D) $184,000
54) On January 2, 2012, Mummy Corporation acquired equipment for $45,000. The estimated life of the equipment is 4 years. The estimated residual value is $5,000. What is the amount of depreciation expense for 2012, if the company uses the double-declining-balance method of depreciation?
A) $10,000
B) $11,250
C) $20,500
D) $22,500
55) On January 2, 2012, Heidi’s Pet Boutique purchased a $5,000 television for the dog sitting area. It had an estimated useful life of 5 years and a residual value of $1,000. What is the amount of depreciation expense for 2013, the second year of the asset’s life using the double declining-balance method?
A) $800
B) $1,200
C) $1,360
D) $2,000
56) Ben’s Burgers paid $300,000 for a piece of equipment. Ben uses straight-line depreciation. Currently the equipment has a balance in the accumulated depreciation account of $100,000. If the asset has no residual value and an estimated life of 6 years, for how many years has the asset been depreciated?
A) 1
B) 2
C) 4
D) 6
57) Income before depreciation and taxes amounts to $167,200. Using straight-line depreciation, the current year’s depreciation expense will be $31,200. Using double-declining-balance depreciation, the current year’s depreciation expense will be $41,200. Assuming a tax rate of 30%, what is the net cash saved in income taxes by using double-declining-balance depreciation over straight-line depreciation?
A) $3,000
B) $4,000
C) $7,000
D) $11,100
10,000 additional depreciation expense * .30 tax rate = 3,000 tax savings
58) Best Model Company reported $61,000 in depreciation expense for the current year using the double-declining-balance method. The company estimates that it saved net cash of $12,000 in income taxes by using the double-declining-balance instead of the straight-line method. The company has a 30% tax rate. What would depreciation expense have been using the straight-line method?
A) $43,857
B) $40,000
C) $21,000
D) $7,200
61,000 double declining -40,000 difference = 21,000 straight-line depreciation
59) Buggy Company purchased equipment on June 3, 2012, for $100,000. The residual value is zero and the estimated life is 10 years. Compute depreciation expense for the year ending December 31, 2012, if the company uses the straight-line method of depreciation.
A) $5,000
B) $5,833
C) $7,500
D) $10,000
60) Buggy Company purchased equipment on June 3, 2012, for $100,000. The residual value is zero and the estimated life is 10 years or 42,550 hours. Compute depreciation expense for the year ending December 31, 2012, if the company uses the units-of-production method of depreciation and uses the equipment for 8,600 hours.
A) $3,210
B) $5,628
C) $11,628
D) $20,210
8,600 ∗ 2.35 = 20,210
