b. $200,000 $184,000 d. $180,000 7. On J anuary 1, 201S, Grant for $20.000 did n

Question

b. $200,000 $184,000 d. $180,000 7. On J anuary 1, 201S, Grant for $20.000 did nog antCompany lent $17,800 cash to Lee Company. The promissory note made for $20,000 were exchan exchanged. Theareplict inerst and car explicit interest and was due on December 31, 2019. No other rights or n ze inten neprevailing interest rate for a loan of this type was six percent Assume that the present value of S1 for two expense in 2018 of a. $1,200. b. $O. c. $1,068. d. $1,100. was estimated to have a life of six years and a residual value of $6,750. In 2018, Adams determined that the crane had a total useful life of seven years and a residual value of $4,500. If Adams uses the straight-line method of depreciation, what will be the depreciation expense for the crane in 2018 a. $9,464 b. $8,000 8. Adams Construction purchased a crane on January 1, 2016, for $102,750. At the time of purchase, the crane c. $16,000 d. $13.250 9. On July 1, Pierce Corporation, a calendar-year company, received a condemnation award of $150,000 as compensation for the forced sale of a plant located on company property that stood in the path of a new highway. On this date, the plant building had a depreciated cost of $75,000 and the land cost was $25,000. On October 1, Pierce purchased a parcel of land for a new plant site at a cost of $62,500. Ignoring income taxes, Pierce should report in its income statement for the year ended December 31 a gain of a. $0. b. $50,000. c. $37.500. d. $12,500. 10. Arthur Co. hie failure to record premium amortization on interest expense and bond carrying value, respectively? neglected to amortize the premium on outstanding ten-year bonds payable. What is the effect of a. Understate; overstate b. Understate; understate e. Overstate; overstate d. Overstate; understate recently exchanged an old truck, which cost $108.000 and was Filmore and paid $70,000 cash for a similar truck having a current f depreciated, and paid $70,000 cash for a similar truc ecked commercial substance. At what amount should the t a. $108,000 b. $70,000 c. $142,000 d. $130,000 k having a current fair value of $130.000. The exchange rck be recorded on the books of Filmore? one-third

Explanation / Answer

Ans. 7. Interest Expenses for the year of 2018 Lee co. should recognised is = 17800X.06 = $1068

So option C is correct,

8. Step : 1 Calculation depreciation exp for the year of 2016 and 2017 = (102750-6750)/6 = $16000

Upto end of 2017 Depreciation exp. charge (16000X2) = 32000

WDV at the begning of 2018 (102750-32000) = 70750

Revised useful life of machine 7years and residual value $4500, remeaning life of machine 5yrs

Depreciation exp. for the year of 2018 = (70750-4500) / 5 = $13250

option d is correct

9. option b is correct profit of $50000

10. option c is correct

11. cost of truck= WDV of old truck + cash payment

                          = 108000X2/3+70000 = $142000

option c is correct

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