Question :
61. On January 1, 2010, Woodstock, Inc. purchased a machine costing : 1228543
61. On January 1, 2010, Woodstock, Inc. purchased a machine costing $40,000. Woodstock also paid $1,000 for transportation and installation. The expected useful life of the machine is 6 years and the residual value is $5,000. Which of the following statements is incorrect?
A. The annual depreciation expense is $6,000.
B. The December 31, 2010 book value was $35,000.
C. The December 31, 2012 accumulated depreciation balance was $18,000.
D. The December 31, 2011 book value was $24,000.
62. A machine, acquired for a cash cost of $15,000, is being depreciated on a straight-line basis of $2,700 per year. The residual value was estimated to be 10% of cost. The estimated useful life is
A. 3 years.
B. 4 years.
C. 5 years.
D. 6 years.
63. Warren Company plans to depreciate a new building using the double declining-balance depreciation method. The building cost $800,000. The estimated residual value of the building is $50,000 and it has an expected useful life of 25 years. Assuming the first year’s depreciation expense was recorded properly, what would be the amount of depreciation expense for the second year?
A. $30,720
B. $32,000
C. $58,880
D. $64,000
64. Warren Company plans to depreciate a new building using the double declining-balance depreciation method. The building cost $800,000. The estimated residual value of the building is $50,000 and it has an expected useful life of 25 years. What is the building’s book value at the end of the first year?
A. $736,000
B. $768,000
C. $686,000
D. $690,000
65. Which method of depreciation results in periodic depreciation expense that fluctuates from one period to the next, not necessarily in a steadily upward or downward direction?
A. Straight-line
B. Units-of-production
C. Modified accelerated cost recovery system
D. Declining balance
66. Hill Inc. purchased an asset on January 1, 2009. Hill chose an accelerated depreciation method to depreciate the asset. Which of the following is correct if Hill would have chosen the straight-line depreciation method instead?
A. Depreciation expense would have been lower in 2009.
B. The book value of the asset would have been lower at the end of 2009.
C. The net income would have been lower during 2009.
D. The accumulated depreciation balance would have been higher at the end of 2009.
67. On January 1, 2010, Pyle Company purchased an asset that cost $50,000 (no estimated residual value, estimated useful life 8 years, straight-line depreciation is used). An error was made because the total cost amount was debited to an expense account for 2010 and no depreciation on it was recorded. Pretax income for 2010 was $42,000. How much is the correct 2010 pretax income?
A. $35,750
B. $48,250
C. $85,750
D. $92,000
2010 pretax income ($85,750) = $42,000 + $50,000 – $6,250*
*Straight-line depreciation expense ($6,250) = $50,000 ? 8
68. Schager Company purchased a computer system on January 1, 2010, at a cash cost of $25,000. The estimated useful life is 10 years, and the estimated residual value is $3,000. The company will use the double declining-balance depreciation method. How much is the 2011 depreciation expense?
A. $5,000
B. $4,000
C. $3,800
D. $2,200
2010 depreciation expense ($5,000) = $25,000 ? 2/10
2011 depreciation expense ($4,000) = ($25,000 – $5,000) ? 2/10
69. Schager Company purchased a computer system on January 1, 2010, at a cash cost of $25,000. The estimated useful life is 10 years, and the estimated residual value is $3,000. The company will use the double declining-balance depreciation method. What is the accumulated depreciation balance as of December 31, 2011?
A. $9,000
B. $4,000
C. $5,000
D. $10,920
2010 depreciation expense ($5,000) = $25,000 ? 2/10
2011 depreciation expense ($4,000) = ($25,000 – $5,000) ? 2/10
December 31, 2011 accumulated depreciation balance ($9,000) = $5,000 + $4,000
70. On January 1, 2010, Wasson Company purchased a delivery vehicle costing $40,000. The vehicle has an estimated 6-year life and a $4,000 residual value. What is the vehicle’s book value as of December 31, 2011 assuming Wasson uses the straight-line depreciation method?
A. $12,000
B. $24,000
C. $30,000
D. $28,000
