The following information is taken from the statement of financialposition of Hamilton Company on December 31, 2008 and December31, 2007.Buildings-costAccumulated depreciation-buildingsa. 20.00b.C.d.200822.225.006.4525,000,0005,000,000Hamilton did not acquire or dispose of any buildings during 2008.Hamilton uses the straight line method of depreciation. If residualvalue is assumed to be 10% of asset cost, what is the average usefullife of the buildings?200725,000,0003,875,000

There are different methods of depreciation and straight line method is one of them. In the straight…

Hamilton did not acquire or dispose of any buildings during 2008. Hamilton uses the straight line method of depreciation. If residual value is assumed to be 10% of asset cost, what is the average useful life of the buildings? a. 20.00 D. 22.22 C. d. 5.00 6.45

Hamilton did not acquire or dispose of any buildings during 2008. Hamilton uses the straight line method of depreciation. If residual value is assumed to be 10% of asset cost, what is the average useful life of the buildings? a. 20.00 D. 22.22 C. d. 5.00 6.45

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter8: Depreciation And Sale Of Business Property

Section: Chapter Questions

Problem 6MCQ: Which of the following is not true about the MACRS depreciation system: A salvage value must be...

See similar textbooks

Similar questions

On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received $12,000,000 in net assets. In 2016, the market value of the goodwill obtained from Branta Corp. was valued at $4,000,000, but in 2017 it dropped to $2,000,000. Prepare the journal entry for the creation of goodwill and the entry to record any impairments to it in subsequent years.
On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
Albany Corporation purchased equipment at the beginning of Year 1 for 75,000. The asset does not have a residual value and is estimated to be in service for 8 years. Calculate the depreciation expense for Years 1 and 2 using the double-declining-balance method. Round to the nearest dollar.
Which of the following is not true about the MACRS depreciation system: A salvage value must be determined before depreciation percentages are applied to depreciable real estate. Residential rental buildings are depreciated over 27.5 years straight-line. Commercial real estate buildings are depreciated over 39 years straight-line. No matter when during the month depreciable real estate is purchased, it is considered to have been placed in service at mid-month for MACRS depreciation purposes.
SEAT Inc. acquired the following assets in January of 2015. Equipment, estimated service life, 5 years; salvage value, $16,200 $503,700 Building, estimated service life, 30 years; no salvage value $648,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2018, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method. (a) Prepare the journal entry to record depreciation expense for the equipment in 2018. (b) Prepare the journal entry to record depreciation expense for the building in 2018.
Maxim Sdn Bhd commenced business as kitchenware manufacturing on 1 January 2013. For the purpose of depreciation, Maxim Sdn Bhd decided the following. Acquisition of a piece of land worth $2,000,000 would not be depreciated. Factory building worth $300,000 would be depreciated by the straight line method to a nil residual value over 30 years. On 1 January 2018, the board of directors decided to revalue its assets after consulted property valuers as following:- Land - $2,500,000Factory building - $450,000 The factory building is estimated still has further 25 years useful life remaining. Calculate the annual charge for depreciation for the first five years of the building's life and the statement of financial position value of the land and building as at the end of each of the first five years. Demonstrate the impact the revaluation will have on the depreciation charge and the statement of financial position value of the land and building.
The T-accounts for Equipment and the related Accumulated Depreciation—Equipment for Skysong, Inc. at the end of 2022 are shown here. Equipment Beg. bal. 60,000 Disposals 16,500 Acquisitions 31,200 End. bal. 74,700 Accum. Depr.—Equipment Disposals 3,825 Beg. bal. 33,375 Depr. exp. 9,000 End. bal. 38,550 In addition, Skysong, Inc.’s income statement reported a loss on the disposal of plant assets of $2,625. What amount was reported on the statement of cash flows as “cash flow from sale of equipment”? (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
CC inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5 years; salvage value, $15,700 $486,700 Building estimated service life, 30 years; no salvage value $711k The equipment has been depreciated using the sum-of-the-years'-digits method for the first 3 years for financial reporting purposes. In 2021, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method. (a) Prepare the general journal entry to record depreciation expenses for equipment in 2021. (b) Prepare the journal entry to record depreciation expenses for the building in 2021. (Round answers to 0 decimal places.)
Buffalo Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5 years; salvage value, $13,700 $523,700 Building, estimated service life, 30 years; no salvage value $678,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2021, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method. (a) Prepare the general journal entry to record depreciation expense for the equipment in 2021. (b) Prepare the journal entry to record depreciation expense for the building in 2021. (Round answers to 0 decimal places,…
Whispering Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5 years; salvage value, $16,200 $503,700 Building, estimated service life, 30 years; no salvage value $648,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2021, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method. (a) Prepare the general journal entry to record depreciation expense for the equipment in 2021. (b) Prepare the journal entry to record depreciation expense for the building in 2021.
On January 1, 2009, Neal Corporation acquired equipment at a cost of $540,000. Neal adopted the sum-of-the-years’-digits method of depreciation for this equipment and had been recording depreciation over an estimated life of eight years, with no residual value. At the beginning of 2012, a decision was made to change to the straight-line method of depreciation for this equipment. The depreciation expense for 2012 would be Select one: a. $108,000 b. $28,125. c. $67,500 d. $45,000.
The T-accounts for Equipment and the related Accumulated Depreciation—Equipment for Vaughn Manufacturing at the end of 2022 are shown here. Equipment Beg. bal. 100,000 Disposals 27,500 Acquisitions 52,000 End. bal. 124,500 Accum. Depr.—Equipment Disposals 6,375 Beg. bal. 55,625 Depr. exp. 15,000 End. bal. 64,250 In addition, Vaughn Manufacturing’s income statement reported a loss on the disposal of plant assets of $4,375. What amount was reported on the statement of cash flows as “cash flow from sale of equipment”? (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Cash flow from sale of equipment $enter cash flow from sale of equipment in dollars