Martin Company purchases a machine at the beginning of the year at a cost of $15

Question

Martin Company purchases a machine at the beginning of the year at a cost of $155,000. The machine is depreciated using the double-declining-balance method. The machine’s useful life is estimated to be 4 years with a $12,900 salvage value. Depreciation expense in year 4 is:

a. $77,500

b. $9.688

c. $12,950

d. $6,475

e. $35,588

A company sold equipment that originally cost $350,000 for $210,000 cash. The accumulated depreciation on the equipment was $140,000. The company should recognize a:

a. $210,000 gain

b. $140,000 loss

c. $70,000 gain

d. $0 gain or loss

e. $70,000 loss

Mayan Company had net income of $32,500. The weighted-average common shares outstanding were 10,000. The company declared a $5,100 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is:

a. $2.49

b. $3.25

c. $3.51

d. $2.74

e. $3.76

Explanation / Answer

1) Depreciation expense in 4 Year :

So answer is d) $6475

2) Book value of equipment = 350000-140000 = 210000

Sale value = 210000

so no profit no gains

So answer is d) $0 gains or loss

3) Earning per share = (32500-5100)/10000 = 2.74

So answer is d) $2.74

Depreciation expense Year 1 155000*50% = 77500 Year 2 77500*50% = 38750 Year 3 38750*50% = 19375 Year 4 6475

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