110. a) On January 1, 2009, Woodstock, Inc., purchased a machinewith a cash pric

Question

110. a) On January 1, 2009, Woodstock, Inc., purchased a machinewith a cash price of $40,000. Woodstock also paid $1,000 fortransportation and installation. The expected useful life of themachine is 6 years and the residual value is $5,000. Assumingstraight-line depreciation, the annual depreciation expense wouldbe ? b) A machine, acquired for a cash cost of $15,000, is beingdepreciated on a straight-line basis of $2,700 per year. Theresidual value was estimated to be 10% of cost. The estimateduseful life is ? c) Warren Company plans to depreciate a new building usingdeclining-balance depreciation with 200 percent accelerationrate. The building cost $800,000. The estimated residualvalue of the building is $50,000 and it has an expected useful lifeof 25 years. Assuming the first year's depreciation expense wasrecorded properly, what would be the amount of depreciation expensefor the second year? d) On January 1, 2009, Pyle Company purchased an asset thatcost $50,000 (no estimated residual value, estimated useful life 8years, straight-line depreciation is used). An error was madebecause the total cost amount was debited to an expense account for2009 and no depreciation on it was recorded. Pretax income for 2009was $42,000. The correct pretax income for 2009 was ? e) Boone Industries purchased a truck for $35,000 on January1, 2009. The truck had an estimated useful life of 80,000 miles andan estimated residual value of $8,000. In the third year ofownership (2010), the car was driven 25,000 miles. Using the unitsof production method, the amount of depreciation expense for 2010was 110. a) On January 1, 2009, Woodstock, Inc., purchased a machinewith a cash price of $40,000. Woodstock also paid $1,000 fortransportation and installation. The expected useful life of themachine is 6 years and the residual value is $5,000. Assumingstraight-line depreciation, the annual depreciation expense wouldbe ? b) A machine, acquired for a cash cost of $15,000, is beingdepreciated on a straight-line basis of $2,700 per year. Theresidual value was estimated to be 10% of cost. The estimateduseful life is ? c) Warren Company plans to depreciate a new building usingdeclining-balance depreciation with 200 percent accelerationrate. The building cost $800,000. The estimated residualvalue of the building is $50,000 and it has an expected useful lifeof 25 years. Assuming the first year's depreciation expense wasrecorded properly, what would be the amount of depreciation expensefor the second year? d) On January 1, 2009, Pyle Company purchased an asset thatcost $50,000 (no estimated residual value, estimated useful life 8years, straight-line depreciation is used). An error was madebecause the total cost amount was debited to an expense account for2009 and no depreciation on it was recorded. Pretax income for 2009was $42,000. The correct pretax income for 2009 was ? e) Boone Industries purchased a truck for $35,000 on January1, 2009. The truck had an estimated useful life of 80,000 miles andan estimated residual value of $8,000. In the third year ofownership (2010), the car was driven 25,000 miles. Using the unitsof production method, the amount of depreciation expense for 2010was c) Warren Company plans to depreciate a new building usingdeclining-balance depreciation with 200 percent accelerationrate. The building cost $800,000. The estimated residualvalue of the building is $50,000 and it has an expected useful lifeof 25 years. Assuming the first year's depreciation expense wasrecorded properly, what would be the amount of depreciation expensefor the second year? d) On January 1, 2009, Pyle Company purchased an asset thatcost $50,000 (no estimated residual value, estimated useful life 8years, straight-line depreciation is used). An error was madebecause the total cost amount was debited to an expense account for2009 and no depreciation on it was recorded. Pretax income for 2009was $42,000. The correct pretax income for 2009 was ? e) Boone Industries purchased a truck for $35,000 on January1, 2009. The truck had an estimated useful life of 80,000 miles andan estimated residual value of $8,000. In the third year ofownership (2010), the car was driven 25,000 miles. Using the unitsof production method, the amount of depreciation expense for 2010was

Explanation / Answer

A.          41,000 -5,000                 6 Annual depreciation is 6,000 / yr B.Residual value - 10% of cost         15,000 * 10%         1,500       15,000-1,500    = 2,700             X X = 5 yrs. E.    35,000 - 8,000           80,000 =$ 0.34 /mile     Depreciation for 2010 25,000miles * 0.34 = $ 8,500

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