14. A plant asset was purchased on January 1 for $27,000 with an estimated salva

Question

14. A plant asset was purchased on January 1 for $27,000 with an estimated salvage value of $3,000 at the end of its useful life. The current year's Depreciation Expense is $3,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $15,000. The remaining useful life of the plant asset is A) 10 years B) 8 years. C) 5 years. D) 3 years 15. Equipment with a cost of $256,000 has an estimated salvage value of $24,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-ine method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours? A) $64,000. B) $70,000. C) $66,000. D) $58,000. 16. Which of the following methods will result in the highest depreciation in the first year? A) Sum-of-years-digits. B) Time valuation. C) Straight-line. D) Declining-balance 17. Treasury shares plus outstanding shares equal A) authorized stock. B) issued stock. C) unissued stock. D) distributable stock. 18. The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to A) decrease total liabilities and stockholders' equity. B) increase total expenses and total liabilities. C) increase total assets and stockholders' equity. D) decrease total assets and stockholders' equity Page 4

Explanation / Answer

Dear student, only one question is allowed at a time. I am answering the first question

14)

Depreciable amount under straight line method

= Cost – Salvage value

= $27,000 - $3,000

= $24,000

Depreciation under straight line method

= Depreciable amount / Useful life

So, $3,000 = $24,000 / Useful life

So, Useful life

= $24,000 / $3,000

= 8 years

Now, Expired useful life

= Accumulated depreciation / Depreciation per year

= $15,000 / $3,000

= 5 years

So, remaining useful life

= Total life – Expired life

= 8 – 5

= 3 years

So, option D is the correct option

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