1 ) Mohr Company purchases a machine at the beginning of the year at a cost of $

Question

1 ) Mohr Company purchases a machine at the beginning of the year at a cost of $24,000. The machine is depreciated using the double-declining-balance method. The machine’s useful life is estimated to be 5 years with a $4,000 salvage value. Depreciation expense in year 2 is:

$4,800.

$8,000.

$9,600.

$5,760.

2) Mohr Company purchases a machine at the beginning of the year at a cost of $24,000. The machine is depreciated using the double-declining-balance method. The machine’s useful life is estimated to be 5 years with a $4,000 salvage value. The machine’s book value at the end of year 2 is:

$12,000.

$7,200.

$9,600.

$8,640.

3) Victory Company purchases office equipment at the beginning of the year at a cost of $15,000. The machine is depreciated using the straight-line method. The machine's useful life is estimated to be 7 years with a $1,000 salvage value. The journal entry to record the first year’s depreciation is:

Debit Depreciation Expense $2,143, credit Accumulated Depreciation $2,143.

Debit Depreciation Expense $2,000, credit Office Equipment $2,000.

Debit Office Equipment $2,000, credit Accumulated Depreciation $2,000.

Debit Accumulated Depreciation $2,143; credit Office Equipment $2,143.

Explanation / Answer

1 Double-declining depreciation rate = 1/5*2 = 40% Depreciation expense in year 1 = 24000*40%= 9600 Depreciation expense in year 2 = (24000-9600)*40%= 5760 Option 4 is correct 2 Machine’s book value at the end of year 2 =24000-9600-5760= 8640 Option 4 is correct 3 Depreciation Expense 2000 =(15000-1000)/7           Accumulated Depreciation 2000 Option 2 is correct

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