0. Orton Corporation, which has a calendar year accounting period, purchased a newmachine for $40,000 on April 1, 2006. At that time Orton expected to use themachine for nine years and then sell it for $4,000. The machine was sold for$22,000 on Sept. 30, 2011. Assuming straight-line depreciation, no depreciationin the year of acquisition, and a full year of depreciation in the year of retirement,the gain to be recognized at the time of sale would bea. $4,000.b. $3,000.c. $2,000.d. $0.

0. Orton Corporation, which has a calendar year accounting period, purchased a newmachine for $40,000 on April 1, 2006. At that time Orton expected to use themachine for nine years and then sell it for $4,000. The machine was sold for$22,000 on Sept. 30, 2011. Assuming straight-line depreciation, no depreciationin the year of acquisition, and a full year of depreciation in the year of retirement,the gain to be recognized at the time of sale would bea. $4,000.b. $3,000.c. $2,000.d. $0.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 8PA: Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the...

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Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of 8 years and a residual value of 300. The double-declining-balance method of depreciation is used. Required: 1. Compute the depreciation expense for each year of the assets life and book value at the end of each year. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the assets life, compute the depreciation expense for each year of the assets life. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the assets life.
Colquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value at the time of purchase was $15,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. Calculate annual depreciation expense for the first four years. Determine the depreciation expense for the final fifteen years of the assets life, and create the journal entry for year five.
Loban Company purchased four cars for 9,000 each and expects that they will be sold in 3 years for 1,500 each. The company uses group depreciation on a straight-line basis. Required: 1. Prepare journal entries to record the acquisition and the first years depreciation expense. 2. If one of the cars is sold at the beginning of the second year for 7,000, what journal entry is required?
Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the purchase of the printer impacts not only depreciation expense each year but also the assets book value. What amount will be recorded as depreciation expense each year, and what will the book value be at the end of each year after depreciation is recorded?
Urquhart Global purchases a building to house its administrative offices for $500,000. The best estimate of the salvage value at the time of purchase was $45,000, and it is expected to be used for forty years. Urquhart uses the straight-line depreciation method for all buildings. After ten years of recording depreciation, Urquhart determines that the building will be useful for a total of fifty years instead of forty. Calculate annual depreciation expense for the first ten years. Determine the depreciation expense for the final forty years of the assets life, and create the journal entry for year eleven.
Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.
Orton Corporation, which has a calendar year accounting period, purchased a new machine for $80,000 on April 1, 2016. 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 Sept. 30, 2021. Assuming straight-line depreciation, no depreciation in the year of acquisition, and a full year of depreciation in the year of retirement, the gain to be recognized at the time of sale would be:
Concord Corporation, which has a calendar year accounting period, purchased a new machine for $95400 on April 1, 2016. At that time Concord expected to use the machine for nine years and then sell it for $9540. The machine was sold for $50800 on Sept. 30, 2021. Assuming straight-line depreciation, no depreciation in the year of acquisition, and a full year of depreciation in the year of retirement, the gain to be recognized at the time of sale would be O $3100. O $0. O $9540. O $5100. O O O
Sheffield Corp., which has a calendar year accounting period, purchased a new machine for $90000 on April 1, 2016. At that time Sheffield expected to use the machine for nine years and then sell it for $9000. The machine was sold for $49100 on Sept. 30, 2021. Assuming straight-line depreciation, no depreciation in the year of acquisition, and a full year of depreciation in the year of retirement, the gain to be recognized at the time of sale would be O $0. O $6100. O $4100. O $9000.
Jersey Corporation, which has a calendar year accounting period, purchased a machine for $400,000 on April 1, 2016. At that time Jersey expected to use the machine for nine years and then sell it for $4,000. The machine was sold for $22,000 on Sept. 30, 2021. Assuming straight-line depreciation, calculate the gain(/(loss) at the sale of the machine.
. The Fisher Company purchased a machine on September 1, 2011, for $80,000. At the time of acquisition, the machine was estimated to have a useful life of eight years and an estimated salvage of $8,000. Fisher has recorded monthly depreciation using the straight-line method. On May 1, 2013, the machine was sold for $50,000. What should be the loss recognized from the sale of the machine?a. $15,000b. $2,500c. $5,000d. $7,500 Example: The Fisher Company purchased a machine on October 1, 2007, for $80,000. At the time of acquisition, the machine was estimated to have a useful life of five years and an estimated salvage of $5,000. Fisher has recorded monthly depreciation using the straight-line method. On April 1, 2009, the machine was sold for $50,000. What should be the loss recognized fromthe sale of the machine?a. $ 0b. $2,500c. $5,000d. $7,500 Annual depreciation expense = (80,000 – 5,000) / 5 = 15,000Monthly depreciation expense = 15,000 / 12 = 1,250Accumulated depreciation = (1250…
3. Counselors of Mableton purchased equipment on January 1, 2017, for $44,500. Counselors of Mableton expected the equipment to last for eight years and have a residual value of $4,500. Suppose Counselors of Mableton sold the equipment for $25,700 on December 31, 2020, after using the equipment for four full years. Assume depreciation for 2020 has been recorded. Journalize the sale of the equipment, assuming straight-line depreciation was used. First, calculate any gain or loss on the disposal of the equipment. Market value of assets received 25,700 Less: Book value of asset disposed of Cost 44,500 Less: Accumulated Depreciation Gain or (Loss)