81,800,000. The appraised value of the land was $1,144,000, the building $ the e

Question

81,800,000. The appraised value of the land was $1,144,000, the building $ the equipment $396,000. What is the cost of the land a. $936,000 b. $600,000 1. Bentley, Inc., purchased a tract of land, a small office building, and some equipment G c. $1,144,000 d. None of the above 2. Which statement is false? cost of the asset against the revenue generated over the asset's useful life. b. Depreciation is a process of allocating the cost of a plant asset over its useful life. c. The cost of a plant asset minus accumulated depreciation equals the asset's book valbe d. Depreciation creates a fund to replace the asset at the end of its useful life. a. Depreciation is based on the expense recognition principle because it apportions the Use the following data for questions 3-6. On October 1,2014, Freedom Communications purchased a new piece of equipment that cost $35,000. The estimated useful life is five years and estimated residual value is $8,000 3. What is the depreciation expense for 2014 if Freedom uses the straight-line method a. $5,400 b. $1,350 c. $1,750 d. $7,000 Assume Freedom Communications purchased the equipment on January 1,2014. If Freedom uses the straight-line method for depreciation, what is the asset's book value at the end of 20152 a. $16,200 b. $21,000 4. c. $24,200 d. $32,200 5. Assume Freedom Communications purchased the equipment on January 1,2014.If Frce dom uses the double-declining-balance method, what is depreciation for 2015? a. $14,000 b. $8,400 c. $22,400 d. $6,480 Return to Freedom's original purchase date of October 1,2014. Assume that Freedom usc the straight-line method of depreciation and sells the equipment for $22,400 on October 2018. The result of the sale of the equipment is a gain (loss) of a. $9,000 b. $1,000. 6. c. ($4,600). d. $0. bought a new machine for $23,000 on January 1.The machine is to last four years and to have a residual value of declining-balance method, accumulated depreciation at the end of year 2 will be a. $23,000. b. $20,000. $3,000. If the company uses the c. $15,000. d. $17,250 8. Which of the following is not a capital expenditure b. e. The cost of installing a piece of equipment d. A tune-up of a company vehicle e. The addition of a building wing a. A complete overhaul of an air-conditioning system helent of an old motor with a new one in a piece of equipment

Explanation / Answer

Ans 1 Land (1144000/2200000*1800000) 936000 Appraised value Land 1144000 Building 660000 Equipment 396000 Total 2200000 Option A $936000 ans 2 D Depreciation creastes a fund to replace the asset at the end of its useful life explanation Depreciaton is an expense which allocates the asset cost over its useful life through the income statement. So it does not create any fund ans 3 SLM=(35000-8000)/5*3/12 1350 Option B $1350 ans 4 SLM=(35000-8000)/5 5400 Book value at dec 31 2015 Cost 35000 Less: Acc dep (5400*2) 10800 Book value 24200 option C $24200 ans 5 DDB rate 1/5*200% 0.4 2014 (35000*40%) 14000 2015 (35000-14000)*40% 8400 Total depreciation 22400 Depreciation for 2015 is option b $8400 ans 6 Cost 35000 Less: Acc dep (5400*4) 21600 Book value 13400 Sales 22400 Gain 9000 Option a $9000 ans 7 DDB rate 1/4*200% 0.5 Depreciation Year 1 (23000*50%) 11500 Year 2 (23000-11500)*50% 5750 Acc dep 17250 Option D $17250 ans 8 d) A tune up of a company vehicle

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