Depreciation Exercise 45, 600 Indicate the best answer for cach question in the

Question

Depreciation Exercise 45, 600 Indicate the best answer for cach question in the space 400 Use the following data for questions 1 and 2 34 On March 12, 2008, Shorcham, Inc. acquired melting equipment for $45,600. The estimated life of the equipment is 6 years, with an estimated residual value of $2,400 1 Refer to above data In its financial statements, Shoreham uses straight-line depreciation with the half- year convention. The book value of the cquipment at December 31, 2009, will be: a S26,600 b $42,000 $34,800 $34,800 d Some other amount. 2 Refer to above data. In its financial statements, Shorcham uses double-declining-balance depreciation with half-year convention. The book value of the equipment at December 31, · 2009, will be: AS't27e20.267. b $12,667. (OS25333. d Some other amount. 3 Sayville Dairy sold a delivery truck for cash of S8,680. The original cost of the truck was S33,600, and a loss of S3,320 was recognized on the sale. The accumulated depreciation at the date of sale must have been a $24,920, bS14,560. $3.360. s19600 Cage Corporation purchases Presley Company's entire business for $2,700,000. The fair market value of Presley's net identifiable acts is $2,400,000. 4 27"n- help l o Presley should record goodwill of $300,000 Presley Cage paid $300,000 for goodwill generated by Presley c Cage should charge the $300,000 excess paid for Presley Company directly to expense d Presley should record amortization over a period not to exceed 40 ycars Throughout the current year, Calverton Company treated sales taxes paid on purchases of plant asscts as revenue expenditures. As a result, the current year's: 5 a Nct income is overstated Revenue is overstated. c Depreciation expense is understated None of the above; payments of sales taxes should be treated as revenue expenditures. b d 8680 A

Explanation / Answer

1

In its financial statements, Shoreham uses straight-line depreciation with the half-year convention. The book value of the equipment at December 31, 2009, will be:

In its financial statements, Shoreham uses double-declining-balance depreciation withhalf-year convention. The book value of the equipment at December 31, 2009, will be:

Sayville Dairy sold a delivery truck for cash of $8,680. The original cost of the truck was$33,600, and a loss of $5,320 was recognized on the sale. The accumulated depreciation at thedate of sale must have been

Cage Corporation purchases Presley Company's entire business for $2,700,000. The fairmarket value of Presley's net identifiable assets is $2,400,000

Cage paid $300,000 for goodwill generated by Presley.

  Throughout the current year, Calverton Company treated sales taxes paid on purchasesof plant assets as revenue expenditures. As a result, the current year's

  Assume Lloyd uses straight-line depreciation with the half-year convention.Depreciation expense to be recognized in 2009 (the year of purchase) is

Assume Lloyd uses 200%-declining-balance depreciation with the half-year convention.Depreciation expense to be recognized in 2010 (the second year of ownership) is:

. Assume Lloyd uses150%-declining-balance depreciation with the half-year convention.Depreciation expense to be recognized in 2009 (the year of purchase) is:

  Assume Lloyd uses the units-of-output method and that the machine was in operation for1,000 hours in 2009 and 1,800 hours in 2010. Thebook valueof the machine at December 31,2010 is

Purchase Price 45600 Residual Value 2400 43200 Depreciation 43200/6 year 7200

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