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##### AC 36100 Fall 2014 Assignment 5: Chapter 11 -Song Company purchased a depreciable asset for \$350,000..

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Question;1;AC 36100 Fall 2014;Assignment 5: Chapter 11;Please present the answers on an excel spreadsheet clearly;stating the answer for;each question by the letter (a, b, c or d). Show work where;necessary to support;your answer. Do not submit answers in scanned pdf. Form.;1. Song Company purchased a depreciable asset for \$350,000;on April 1, 2012.;The estimated salvage value is \$35,000, and the estimated;useful life is 5 years.;The straight-line method is used for depreciation. What is;the balance in;accumulated depreciation on May 1, 2015 when the asset is;sold?;a. \$126,000;b. \$147,000;c. \$173,250;d. \$194,250;2. Morgan Corporation purchased a depreciable asset for;\$400,000 on January 1;2012. The estimated salvage value is \$40,000, and the;estimated useful life is 9;years. The straight-line method is used for depreciation. In;2015, Morgan;changed its estimates to a total useful life of 5 years with;a salvage value of;\$60,000. What is 2015 depreciation expense?;a. \$40,000;b. \$60,000;c. \$110,000;d. \$120,000;3. Rock Company purchased a depreciable asset for \$500,000;on April 1, 2012.;The estimated salvage value is \$50,000, and the estimated;total useful life is 5;years. The straight-line method is used for depreciation.;What is the balance in;accumulated depreciation on May 1, 2015 when the asset is;sold?;a. \$196,667;b. \$210,000;c. \$247,500;d. \$277,500;4. Torque Co. has equipment with a carrying amount of;\$1,600,000. The expected;future net cash flows from the equipment are \$1,630,000, and;its fair value is;\$1,360,000. The equipment is expected to be used in;operations in the future.;What amount (if any) should Torque report as an impairment;to its equipment?;a. No impairment should be reported.;b. \$240,000;c. \$30,000;d. \$270,000;5. Regis Inc. bought a machine on January 1, 2004 for;\$400,000. The machine had;an expected life of 20 years and was expected to have a;salvage value of;\$40,000. On July 1, 2014, the company reviewed the potential;of the machine;and determined that its undiscounted future net cash flows;totaled \$200,000 and;its discounted future net cash flows totaled \$140,000. If no;active market exists;for the machine and the company does not plan to dispose of;it, what should;Regis record as an impairment loss on July 1, 2014?2;a. \$ 0;b. \$11,000;c. \$20,000;d. \$71,000;6. Barton Corporation acquires a coal mine at a cost of;\$1,800,000. Intangible;development costs total \$360,000. After extraction has;occurred, Barton must;restore the property (estimated fair value of the obligation;is \$180,000), after;which it can be sold for \$210,000. Barton estimates that;5,000 tons of coal can;be extracted. What is the amount of depletion per ton?;a. \$426;b. \$384;c. \$468;d. \$360;7. Barton Corporation acquires a coal mine at a cost of;\$1,500,000. Intangible;development costs total \$360,000. After extraction has;occurred, Barton must;restore the property (estimated fair value of the obligation;is \$180,000), after;which it can be sold for \$510,000. Barton estimates that;5,000 tons of coal can;be extracted. If 900 tons are extracted the first year;which of the following would;be included in the journal entry to record depletion?;a. Debit to Accumulated Depletion for \$275,400;b. Debit to Inventory for \$275,400;c. Credit to Inventory for \$270,000;d. Credit to Accumulated Depletion for \$459,000;8. Piazza Co. purchased a machine on July 1, 2014, for;\$800,000. The machine;has an estimated useful life of five years and a salvage;value of \$160,000. The;machine is being depreciated from the date of acquisition by;the 150% decliningbalance;method. For the year ended December 31, 2014, Piazza should;record;depreciation expense on this machine of;a. \$240,000.;b. \$160,000.;c. \$120,000.;d. \$96,000.;9. A machine with a five-year estimated useful life and an;estimated 10% salvage;value was acquired on January 1, 2013. The depreciation;expense for 2015;using the double-declining balance method would be original;cost multiplied by;a. 90% ? 40% ? 40%.;b. 60% ? 60% ? 40%.;c. 90% ? 60% ? 40%.;d. 40% ? 40%.;10. On April 1, 2013, Verlin Co. purchased new machinery for;\$300,000. The;machinery has an estimated useful life of five years, and;depreciation is;computed by the sum-of-the-years'-digits method. The;accumulated depreciation;on this machinery at March 31, 2015, should be;a. \$200,000.;b. \$180,000.;c. \$120,000.;d. \$100,000.3;11. Harris Co. takes a full year's depreciation expense in;the year of an asset's;acquisition and no depreciation expense in the year of;disposition. Data relating;to one of Harris's depreciable assets at December 31, 2015;are as follows;Acquisition year 2013;Cost \$210,000;Residual value 30,000;Accumulated depreciation 144,000;Estimated useful life 5 years;Using the same depreciation method as used in 2013, 2014;and 2015, how;much depreciation expense should Harris record in 2016 for;this asset?;a. \$24,000;b. \$36,000;c. \$42,000;d. \$48,000;12. A depreciable asset has an estimated 15% salvage value.;At the end of its;estimated useful life, the accumulated depreciation would;equal the original cost;of the asset under which of the following depreciation;methods?;Straight-line Productive Output;a. Yes No;b. Yes Yes;c. No Yes;d. No No;13. Net income is understated if, in the first year;estimated salvage value is;excluded from the depreciation computation when using the;Straight-line Production or;Method Use Method;a. Yes No;b. Yes Yes;c. No No;d. No Yes;14. Galt Company acquired a tract of land containing an;extractable natural;resource. Galt is required by the purchase contract to;restore the land to a;condition suitable for recreational use after it has;extracted the natural resource.;Geological surveys estimate that the recoverable reserves;will be 4,000,000 tons;and that the land will have a value of \$600,000 after;restoration. Relevant cost;information follows;Land \$6,400,000;Estimated restoration costs 1,200,000;If Galt maintains no inventories of extracted material, what;should be the charge;to depletion expense per ton of extracted material?;a. \$1.60;b. \$1.75;c. \$2.00;d. \$1.904;15. In January 2014, Fritz Mining Corporation purchased a;mineral mine for;\$6,300,000 with removable ore estimated by geological;surveys at 2,500,000;tons. The property has an estimated value of \$600,000 after;the ore has been;extracted. Fritz incurred \$1,725,000 of development costs;preparing the property;for the extraction of ore. During 2014, 390,000 tons were;removed and 350,000;tons were sold. For the year ended December 31, 2014, Fritz;should include;what amount of depletion in its cost of goods sold?;a. \$798,000;b. \$889,200;c. \$1,039,500;d. \$1,158,000

Paper#37757 | Written in 18-Jul-2015

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