Question : Table 10-1 On January 1, 2013, Bark Manufacturing Company Ltd. purchased : 1212444

 

Table 10-1

 

On January 1, 2013, Bark Manufacturing Company Ltd. purchased a machine for $27,500, and expects to use the machine a total of 32,000 hours over the next four years. Bark set the residual value on the machine at $3,500. Bark used the machine 6,000 hours in 2013 and 7,200 hours in 2014.

 

21) Referring to Table 10-1, what is the amortization expense for 2013 if Bark uses double-declining-balance amortization?

A) $12,000

B) $13,750

C) $6,875

D) $6,000

22) Referring to Table 10-1, what is the amortization expense in 2014 if Bark uses straight-line amortization?

A) $6,875

B) $13,750

C) $12,000

D) $6,000

 

23) Referring to Table 10-1, what is the amortization expense in 2014 if Bark uses double-declining-balance amortization?

A) $6,875

B) $6,000

C) $13,750

D) $12,000

 

24) Referring to Table 10-1, what is the amortization expense in 2014 if Bark uses units-of-production amortization?

A) $5,400

B) $4,500

C) $6,192

D) $5,156

 

25) Which of the following statements is true?

A) Accumulated amortization is that portion of a property, plant, and equipment asset’s cost that has already been recorded as an expense.

B) Amortization is a process of valuation.

C) Amortization represents the cash a business has set aside to replace assets as they become fully amortized.

D) Accumulated amortization is classified as a liability account on the balance sheet.

26) To measure amortization for a property, plant, and equipment asset, all of the following must be  known except:

A) estimated useful life.

B) historical cost.

C) current market value.

D) estimated residual value.

 

27) The entry to record amortization on a building is:

A)

Amortization Expense

          Accumulated Amortization-Building

 

B)

Amortization Expense

          Building

 

C)

Building Expense

          Accumulated Building Expense

 

D)

Building Expense

          Building

 

 

28) Book value is defined as:

A) cost minus residual value.

B) cost minus accumulated amortization.

C) current market value minus residual value.

D) current market value minus accumulated amortization.

29) Multiplying the asset’s book value by a constant percentage is the computation of amortization under:

A) the double-declining-balance method.

B) the units-of-production method.

C) the straight-line method.

D) either double-declining-balance method or straight-line method.

 

30) The amortization method that initially ignores residual value in the initial calculation is:

A) double-declining-balance.

B) straight-line.

C) both double-declining-balance and straight-line.

D) units-of-production.

 

Table 10-2

 

On January 1, 2013, Homes Realty Ltd. purchased a $45,000 vehicle to chauffeur clients to prospective homes. Homes plans on driving the vehicle for five years or 100,000 kilometres. Expected residual value is $10,000.