1.ABC Inc. agrees with Home Renovations Inc. to pay $30,000 in five years for a lawnmower. Interest rates are 8% compounded semi-annually. How much should ABC Inc. debit to capital assets upon making this purchase? Please round to the nearest whole number.
$13,896
$24,657
$36,501
$30,000
$20,267
2.On May 1, 2015, Casico Toy Inc. purchased a new piece of equipment that cost $52,000. The estimated useful life is five years and the estimated residual value is $ 4,000. During the five years of useful life the equipment is expected to produce 20,000 units.
If Toy Inc. uses the straight line method for depreciation, what is the depreciation expense for the year ended, December 31st, 2015:
$ 9,600
$ 6,400
$ 6,933
$ 5,600
None of the other alternatives are correct
3.A building cost $25,000 and has a $5,000 residual value and an expected useful life of ten years. What is the depreciation expense in Year 1 using the Double-Declining-Balance Method at the straight-line rate?
$5,000
$4,000
None of the other alternatives are correct
$2,500
$2,000
4.Al’s Advertising Company trades in a red vehicle which had originally cost the Company $22,000 for a blue vehicle which has a list price of $18,600. The net book value of the red vehicle is $19,000. The car dealership allows a $17,500 trade-in but Al’s Advertising Company has to pay in $1,100 to make it a fair deal. The red vehicle being traded in could be sold, if it wasn’t traded in, for $17,000 on the open market as a second-hand vehicle. What value should A’s Advertising use to record the blue vehicle on their books?
$18,400
$17,300 sale price of red vehicle on the open market
$18,100
$19,000
$18,600 list price
6.Carrier Company buys a truck costing $15,000. It is expected to last for 8 years but to be traded-in after 4 years for a newer model (the trade-in allowance is estimated at $3,000). The truck is expected to be driven
20,000Km Yr 1
25,000 Km Yr 2
35,000 Km Yr 3
What is the depreciation expense in year 3 under the units of activity depreciation method.
$5,250
$3,900
None of the above
$5,100
$3,500
8.Equipment cost $15,000 and has a $1,000 residual value and an expected useful life of four years. What is the depreciation expense in Year 4 using the Double-Declining-Balance Method at the straight-line rate?
None of the other alternatives are correct
$875
$937.50
$700
$1,000
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