Equipment with a cost of $390,000 and estimated residual value of $60,000 is expected to have a useful life of 30,000 hours

Equipment with a cost of $390,000 and estimated residual value of $60,000 is expected to have a useful life of 30,000 hours. During August, the equipment was operated 700 hours. What amount should be recorded as depreciation expense for the month?

A) $8,400.

B) $7,700.

C) $9,100.

D) $7,000.

Answer: B

A company purchases a piece of equipment on January 1, 2021, for $70,000 and the equipment has an expected useful life of five years. Its residual value is estimated to be $10,000. Assuming the company uses the straight-line depreciation method, what should be the balance in accumulated depreciation for the equipment as of December 31, 2023 (three years later)?

A) $44,000.

B) $32,000.

C) $36,000.

D) $42,000.

Answer: C

A building was purchased for $50,000. The asset has an expected useful life of six years and depreciation expense each year is $8,000 using the straight-line method. What is the residual value of the building?

A) $0.

B) $2,000.

C) $4,000.

D) $6,000.

Answer: B

Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is expected to have a five-year service life, with a residual value of $5,000 at the end of five years.
Using the double-declining balance method, depreciation expense for 2022 would be:

A) $22,000.

B) $13,200.

C) $14,400.

D) $24,000.

Answer: C

Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is expected to have a five-year life, with a residual value of $5,000 at the end of five years.

Using the double-declining balance method, the book value at December 31, 2022, would be:

A) $21,600.

B) $24,800.

C) $36,000.

D) $45,600.

Answer: A

A machine has a cost of $15,000, an estimated residual value of $3,000, and an estimated useful life of four years. The machine is being depreciated on a straight-line basis. At the end of the second year, what amount will be reported for accumulated depreciation?

A) $9,000.

B) $6,000.

C) $7,500.

D) $3,000.

Answer: B

Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is expected to have a five-year service life

Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is expected to have a five-year service life, with a residual value of $5,000 at the end of five years.
Using the double-declining balance method, depreciation expense for 2021 would be:

A) $24,000.

B) $22,000.

C) $19,000.

D) $20,000.

Answer: A

Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is expected to have a five-year service life, with a residual value of $5,000 at the end of five years.
Using the straight-line method, depreciation expense for 2022 and the book value at December 31, 2022, would be:

A) $12,000 and $36,000.

B) $12,000 and $31,000.

C) $11,000 and $33,000.

D) $11,000 and $38,000.

Answer: D

Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is expected to have a five-year service life, with a residual value of $5,000 at the end of five years.
Using the straight-line method, the book value at December 31, 2021, would be:

A) $44,000.

B) $49,000.

C) $55,000.

D) $60,000.

Answer: B

Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is expected to have a five-year service life,

Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is expected to have a five-year service life, with a residual value of $5,000 at the end of five years.
Using the straight-line method, depreciation expense for 2021 would be:

A) $12,000.

B) $11,000.

C) $60,000.

D) None of these.

Answer: B

Which depreciation method generally will result in the greatest amount of depreciation expense in the first year of the asset's life?

A) Straight-line.

B) Double-declining balance.

C) Activity-based.

D) Capitalization.

Answer: B

The depreciable cost used in calculating depreciation expense is:

A) Its service life.

B) The amount allowable under tax depreciation methods.

C) The difference between its replacement value and cost.

D) The asset's cost minus its estimated residual value.

Answer: D

Which one of the following regarding the book value of an asset is correct?

A) It is the fair value of the asset if the asset is sold.

B) It reflects the original cost of the asset less accumulated depreciation.

C) It is the original cost of the asset minus the depreciation expense for that asset during the year.

D) It is the original cost at which the asset was purchased.

Answer: B

The factors used to compute depreciation expense are an asset's:

A) Cost, residual value, and physical life.

B) Cost, residual value, and service life.

C) Fair value, residual value, and economic life.

D) Cost, replacement value, and service life.

Answer: B

Which of the following is considered a "contra" account?

A) Deferred Revenue.

B) Goodwill.

C) Accumulated Depreciation.

D) Cost of Goods Sold.

Answer: C

The replacement of a major component increased the productive capacity of equipment from 10 units per hour to 18 units per hour

The replacement of a major component increased the productive capacity of equipment from 10 units per hour to 18 units per hour. The expenditure for the replacement component should be debited to:

A) Repairs Expense.

B) Maintenance Expense.

C) Equipment.

D) Gain from Repairs.

Answer: C

Which of the following subsequent expenditures would not be capitalized?

A) Unsuccessful legal defense of intangible assets.

B) Additions.

C) Improvements.

D) Successful legal defense of intangible assets.

Answer: A

Which of the following statements accurately describes depreciation?

I. Depreciation is used to allocate the cost of the asset over periods benefited.

II. Depreciation is used to track the fair value of the asset.

III. The book value of an asset is its original cost less accumulated depreciation.

A) I and III

B) I and II

C) II and III

D) All of these statements are correct.

Answer: A

Woods Company made an ordinary repair to a delivery truck at a cost of $500. Woods' accountant debited the asset account

Woods Company made an ordinary repair to a delivery truck at a cost of $500. Woods' accountant debited the asset account, Equipment. Was this treatment an error, and if so, what will be the effect on Woods' financial statements?

A) No, the repair was accounted for correctly.

B) Yes, the error overstated assets and net income.

C) Yes, in the years following, net income will be overstated.

D) Yes, the error understated net income.

Answer: B

The purchase of a new cooling system for $150,000 to upgrade an office building owned by the company would be accounted for as:

A) Goodwill.

B) An addition in the Buildings account.

C) An expense in the period of the purchase.

D) A patent.

Answer: B

Adding a refrigeration unit to a delivery truck that previously did not have this capability is an example of:

A) Repairs and maintenance.

B) Additions.

C) Improvements.

D) An expenditure that only benefits the current period.

Answer: B