1. Tuco Salamanca Corp. sold a machine for $4,000 on December 31, 2019. The machine was...

1.

Tuco Salamanca Corp. sold a machine for $4,000 on December 31, 2019. The machine was purchased on January 1, 2016, for $8,500. The residual value was estimated at $500, and the firm uses the straight-line depreciation method with an estimated useful life of 8 years. Which of the statements is correct?

	a.	The company will record a gain from the sale of $500.
	b.	The company will report a gain from the sale of $0.
	c.	The company will record a loss from the sale of $500.
	d.	The company will report a loss from the sale of $250.

2.

Which of the following costs will not be part of the value of PP&E that is constructed by a company for internal use?

	a.	Wages of construction workers.
	b.	Depreciation of the machines used in the construction.
	c.	The salary of the CEO.
	d.	Interest on debt used to finance the construction.

3.

The depreciation expense will never appear in:

	a.	The notes to the financial statements.
	b.	The balance sheet.
	c.	The income statement.
	d.	The statement of cash flows.

4.

Skinny Pete Inc. uses the units method of depreciation for one of its machines. The company bought the machine on March 12, 2017, for $1,400. The company estimates that the machine will be used to produce 300 gadgets in 2017, 500 gadgets in 2018, and 400 gadgets in 2019. The company further estimates that the machine has a residual value of $200. The machine was sold on December 31, 2018, for $600. Which of the statements is correct?

	a.	The company will report a loss from the sale of $300.
	b.	The company will record a gain from the sale of $333.33.
	c.	The company will record a loss from the sale of $333.33.
	d.	The company will report a gain from the sale of $0.

Expert Solution

ekkarill92 answered 3 hours ago

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