Question

13) Lorenzo Corporation purchased equipment on January 1, 2019 for $600,000. The equipment had an estimated useful life of 5 years and an estimated salvage value of $60,000. After using the equipment for 2 years, the company determined that the equipment could be used for an additional 6 years and have a salvage value of $8,000. Assuming Lorenzo Corporation uses straight-line depreciation, compute depreciation expense for the year ending December 31, 2021. (Round your final answer to the nearest dollar.)

A) $216,000

B) $64,000

C) $62,667

D) $108,000

14) Marjorie Corporation acquired a building on January 1, 2019, for $800,000. The building had an estimated useful life of 20 years and an estimated salvage value of $29,000. On January 1, 2021, Marjorie Corporation determined that the building could only be used for another 10 years and there would be no salvage value. Compute depreciation expense for the year ending December 31, 2021, if Marjorie Corporation uses straight-line depreciation.

A) $38,550

B) $115,650

C) $72,290

D) $77,100

15) Cramer Company purchased equipment on May 1, 2019 for $200,000. The residual value is $20,000 and the estimated useful life is 10 years. What is the Depreciation Expense for the year ending December 31, 2019, if the company uses the straight-line method? (Round your final answer to the nearest dollar.)

A) $13,333

B) $12,000

C) $20,000

D) $18,000

Answer 1

Answer 13

Equipment Cost	$        600,000
Less: Salvage value	$          60,000
Depreciable cost	$        540,000
Divided by: Useful life	5
Depreciation per year	$        108,000
Equipment Cost	$        600,000
Less: Accumulated Depreciation for two Years (108000*2)	$        216,000
Book value at end of two years	$        384,000
Book value	$        384,000
Less: Salvage value	$            8,000
Depreciable cost	$        376,000
Divided by: Remaining useful life	6
Depreciation per year (for 2021)	$          62,667
Correct option is C.	$          62,667

Answer 14

Building Cost	$      800,000
Less: Salvage value	$        29,000
Depreciable cost	$      771,000
Divided by: Useful life	20
Depreciation per year	$        38,550
Building Cost	$      800,000
Less: Accumulated Depreciation for two Years (38550*2)	$        77,100
Book value at end of two years	$      722,900
Book value	$      722,900
Less: Salvage value	$                 -
Depreciable cost	$      722,900
Divided by: Remaining useful life	10
Depreciation per year (for 2021)	$        72,290
Correct option is C.	$        72,290

Answer 15

Equipment Cost	$        200,000
Less: Salvage value	$          20,000
Depreciable cost	$        180,000
Divided by: Useful life	10
Depreciation per year	$          18,000
Number of months (May 1, 2019 to December 31, 2019)	8 months
Depreciation expense for December 31, 2019 (18000*8/12)	$          12,000
Correct option is B.	$          12,000