Question

In: Accounting

11. Warren has equipment with cost of $22,000 and accumulated depreciation of $16,000. If Warren sells...

11. Warren has equipment with cost of $22,000 and accumulated depreciation of $16,000. If Warren sells the equipment for $7,000, what is the gain or loss?

A. gain of $7,000

b. loss of $1,000

c. gain of $13,000

d. gain of $1,000

12.How are partners compensated in a partnership?

A. each partner receives a cash payment on 12/31

b. each partner gets a salary paid in cash

c. each partner's capital receives a portion of the net income or loss in closing

d. interest expense is debited, and each partner receives the interest in cash

13. How are assets contributed by the partners valued in the partnership?

A. valued at original cost

b. valued at original cost minus accumulated depreciation

c. valued at fair market value

d. valued at an amount specified by the contributing partner

14.Conner contributed $15,000 cash to the AB partnership and received a $20,000 capital interest. Who received the bonus in this case?

A. the other partners of AB partnership

b. there was no bonus

c. Conner received the bonus

d. none of these is correct

15.Which of the following depreciation methods is accelerated?

A. straight line

b. units of activity

c. double declining balance

e. all of these are accelerated

Solutions

Expert Solution

11:- Gain on sale of equipment = Sales Proceed - Book value

=$7000 - ($22000-$16000)

=$ 1000 gain.

12:-Option (c) "each partner's capital receives a portion of the net income or loss in closing" is Correct.

explantion:- After adjustment of operating income, interest to partner ,salary allowance etc ,Balanced income transferred to partner's capital accounts in their profit sharing ratio.

Others options:- No such payment given in option made in cash.

13:- Option (c)"valued at fair market value " is Correct.

14:- Option (b)" there was no bonus " is Correct.

New Partner getting interest capital more than it's contributed amount therefore partnership.have negative goodwill of $5000($15000-$20000)

15:- Option (c) "Double Declining Method" is Correct option.

Accelerated depreciation is any method of depreciation that allows greater deprecation expenses in the early years of the life of an asset and reduced by certain rate. Double declining method is accelerated depreciation method.

Straight line method charge equal depreciation in every year of useful life of assets.

unit of activity method charge depreciation on usefulness of assets

ekkarill92 answered 1 year ago

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