Question

1. Schenn's Tools and Dies Corporation buys a stamping machine for $480,000. The machine has an estimated residual value of $40,000. Shenn's Tools and Dies Corp expects the machine to produce four million units. It makes 560,000 units during 2018.

Using the units-of-production method, Shenn's Tools and Dies Corp would report depreciation expense for 2018 of:

Multiple Choice

• $560,000.

• $67,200.

• $61,600.

• $520,000.

2. Utley Corp purchased a new truck on January 1, 2018. The truck cost $25,000, has an estimated life of ten years, and has an estimated residual value of $2,500. Utley Corp uses the double-declining-balance method to compute depreciation.

What is Utley Corp's adjusted balance in its Accumulated Depreciation account at the end of 2019 (two years after purchase)?

Multiple Choice

• $8,000.

• $2,500

• $9,000.

• $1,000

3.

On January 1, 2019, Horton Inc. sells a machine for $23,400. The machine was originally purchased on January 1, 2017 for $40,700. The machine was estimated to have a useful life of 5 years and a salvage value of $0. Horton uses straight-line depreciation. In recording this transaction:

Multiple Choice

• a loss of $1,020 would be recorded.

• a gain of $23,400 would be recorded.

• a loss of $17,300 would be recorded.

• a gain of $1,020 would be recorded.

4. Rollins Corp purchases a truck on January 1, 2018, for $112,000. The truck is expected to have a useful life of ten years and a residual value of $16,000. The company closes its books on December 31 each year. Under the double-declining balance method, what is the total amount of depreciation to be expensed for the truck during the 2019 fiscal year (year 2 of 10)?

Multiple Choice

• $48,000

• $22,400

• $89,600

• $17,920

Answer 1