10 (a) Flashcards
Worley truck rental uses the group depreciation method for its fleet of trucks. When it retired one of its trucks and receives cash from a salvage company, the carrying value of the property, plant, and equipment would be decreased by the
Cash proceeds received
Morgan corporation purchase a depreciable asset for $600,000 on January 1, 2023. The estimated salvage value is $60,000, in the estimated useful life is 9 years. The straight line method is used for depreciation. In 2026, Morgan changed its estimates to a total useful life of five years with a salvage value of $90,000. What is 2026 depreciation expense?
$165,000
Michi company purchased factory equipment for $640,000 on January 1. The assets useful life in hours is estimated to be 175,000. The estimated salvage value is $45,000 in the estimated useful life is eight years. The machine was used for 19,000 hours in the first year. If the activity method is used, what is depreciation expense for the first year of the asset useful life?
$64,600
Song company purchased a depreciable asset for $700,000 on April 1, 2023. The estimated salvage value is $70,000, and the estimated useful life is 5 years. The straight line method is used for depreciation. What is the balance and accumulated depreciation on May 1, 2026, when the asset is sold?
$388,500
Grover corporation purchased a truck at the beginning of 2025 for $109,200. The truck is estimated to have a salvage value of $4,200 in a useful life of 120,000 miles. It was driven 21,000 miles in 2025 and 29,000 miles in 2026. depreciation expense for 2025 is
$18,375
Orton incorporation, which has a calendar year accounting. Purchased a new machine for $80,000 on April 1, 2021. At that time, Orton expected to use the machine for nine years and then sell it for $8,000. The machine was sold for $44,000 on September 30, 2026. Assuming straight line appreciation, no depreciation in the year of acquisition, in a full year of depreciation in the year of retirement, the gain to be recognized at the time of the sale would be
$4,000
on January 1, 2025, Garden company purchased a new machine for $4,200,000. The new machine has an estimated useful life of nine years, and the salvage value was estimated to be $150,000. Depreciation was computing using the sum-of-the-years’ digit method. What amount should be reported on gardens balance sheet at December 31, 2026 net of accumulated appreciation for this machine?
$2,670,000
A schedule of machines owned by Micco Co
Cost Salvage Life X $600,000 $40,000 14 Y 800,000 80,000 10 Z 300,000 60,000 6
make a compute depreciation by the composite method. The composite rate of depreciation (in %) for these assets is
8.94
Slotkin Products purchased a machine for $65,000 on July 1, 2025. The company attends to depreciate over eight years using the double declining balance method. The salvage value is $5,000. Depreciation expense for 2025 is
$8,125
on September 19, 2025, Markham Co.purchased machinery for $475,000. The salvage value is estimated to be $25,000. The machinery will be depreciated over eight years using the sum of the years digit method. If depreciation is computed on the basis of the nearest full month, Markham should record depreciation expense for 2026 on this machinery of
$96,875
what method requires that the book value not be reduced below salvage value and results in a decreasing charge to depreciation expense each year?
double declining balance method
what principle best describes the conceptual rationale for the methods of matching depreciation expense with revenues?
systematic and rational allocation
Rock company purchased a depreciable asset for $600,000 on April 1, 2023. The estimated salvage value is $60,000, and the estimated total useful life is five years. The straight line method is used for depreciation. What is the balance and accumulated depreciation on May 1, 2026 when the asset is sold?
$333,000
Halltown Company purchased a depreciable asset for $600,000. The estimated salvage value is $40,000, and the estimated useful life is eight years. The double declining balance method is used for depreciation. What is the depreciation expense for the second year of the assets life?
$112,500
