Question 1a When a company discards machinery that is fully depreciated, this tr

Question

Question 1a

When a company discards machinery that is fully depreciated, this transaction would be recorded with the following entry:

debit Machinery; credit Accumulated Depreciation

debit Depreciation Expense; credit Accumulated Depreciation

debit Cash; credit Accumulated Depreciation

debit Accumulated Depreciation; credit Machinery

Question 1b

Fixed assets are ordinarily presented in the balance sheet:

at replacement costs

at cost less accumulated depreciation

in a separate section along with intangible assets

at current market values

Question 1c

A machine with a cost of $26,000 has an estimated residual value of $2,000 and an estimated life of 6 years or 3,000 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the third full year, during which the machine was used 400 hours?

$4,333

$3,200

$3,467

$4,000

Question 1d

The Weber Company purchased a mining site for $500,000 on July 1, 2015. The company expects to mine ore for the next 10 years and anticipates that a total of 100,000 tons will be recovered. The estimated residual value of the property is $80,000. During 2015 the company extracted and sold 6,000 tons of ore. The depletion expense for 2015 is:

$50,000

$42,000

$25,200

$12,600

Question 1e

Which of the following items would not be considered an intangible asset?

goodwill

copyright

patent

mineral ore deposits

debit Machinery; credit Accumulated Depreciation

debit Depreciation Expense; credit Accumulated Depreciation

Explanation / Answer

1A debit Accumulated Depreciation; credit Machinery

1B at cost less accumulated depreciation

1C (Cost-Residual Value)* Hours operated / Total no of hours i.e., (26,000-2,000) * 400/3,000= 3,200

1D (Cost-Residual Value)* Units extracted / Total no of units i.e., (500,000-80,000) * 6000/100000= 25,200

1E Mineral ore deposit as it is tangible

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