Part 1 A truck costing $13,200, which has Accumulated Depreciation of $9,120, was sold for $2,120 cash. The entry to record this event would include a: Multiple Choice A. credit to the Vehicles account for $4,080. B. credit to Accumulated Depreciation for $9,120. C. gain of $1,960. D. loss of $1,960.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Part 1
A truck costing $13,200, which has
A. credit to the Vehicles account for $4,080.
Part 2
A machine is purchased on January 1, 2018, for $114,000. It is expected to have a useful life of five years and a residual value of $17,000. The company closes its books on December 31. Under the double-declining balance method, what is the total amount of depreciation to be expensed during the 2019?
Part 3
Marshall Company purchases a machine for $220,000. The machine has an estimated residual value of $20,000. The company expects the machine to produce four million units. The machine is used to make 500,000 units during the current period.
If the units-of-production method is used, the depreciation rate is:
Part 4
The company has net sales revenue of $7.0 million during 2018. The company's records also included the following information:
| Assets | 12/31/17 | 12/31/18 | ||||
| Property, plant and equipment | $ | 4.0 | million | $ | 5.9 | million |
| Licensing agreements | $ | 2.2 | million | $ | 2.1 | million |
| $ | 2.0 | million | $ | 2.0 | million | |
| Investments | $ | 2.1 | million | $ | 2.2 | million |
What is the company's fixed asset turnover ratio for 2018?
C. 1.00
D. 1.41
Part 5
Tidy Limited purchased a new van on January 1, 2018. The van cost $36,000. It has an estimated life of six years and the estimated residual value is $3,600. Tidy uses the double-declining-balance method to compute depreciation.
What is the adjusted balance in the Accumulated Depreciation account at the end of 2019?
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