141.On May 1, 2014, Pinkley Company sells office furniture for €60,000 cash. The office furniture originally cost €150,000 when purchased on January 1, 2007. Depreciation is recorded by the straight-line method over 10 years with a residual value of €15,000. What gain should be recognized on the sale?
a.€4,500.
b.€9,000.
c.€9,500.
d.€18,000.
142.Mather Company purchased equipment on January 1, 2013 at a total invoice cost of $280,000; additional costs of $5,000 for freight and $25,000 for installation were incurred. The equipment has an estimated residual value of $10,000 and an estimated useful life of five years. The amount of accumulated depreciation at December 31, 2014 if the straight-line method of depreciation is used is:
a.$108,000.
b.$110,000.
c.$120,000.
d.$124,000.
143.Kingston Company purchased a piece of equipment on January 1, 2013. The equipment cost $120,000 and had an estimated life of 8 years and a residual value of $15,000. What was the depreciation expense for the asset for 2014 under the double-declining-balance method?
a.$13,000.
b.$22,500.
c.$30,000.
d.$13,125.
144.Regarding depreciation,
a.External auditors select the method believed to be most appropriate and consistent with other companies in the same industry.
b.The income statement is impacted by depreciation through the accumulated depreciation account, and the statement of financial position is impacted by depreciation expense.
c.Once a company chooses a depreciation method, it should apply the same method consistently over the entire useful life of the asset.
d.All of these answer choices are correct.
145.On January 1, 2013, Chicago Furniture purchased a new delivery truck. The truck is expected to be driven a total of 130,000 miles during its useful life of 4 years; however, Chicago Furniture expects that 2014 and 2015 will be the years the truck is most frequently used for deliveries. If Chicago Furniture wants to achieve the best matching of expenses with revenues, which IFRS acceptable deprecation method should it select?
a.Straight-line depreciation.
b.Units-of-activity depreciation.
c.Declining-balance depreciation.
d.Component depreciation.
146.On January 1, 2013, Chicago Furniture purchased a new delivery truck. The company paid $60,000 for the truck, $12,000 for an annual insurance policy and $1,300 for a motor vehicle license. The truck has an estimated residual value of $5,000 at the end of its 4 year useful life and Chicago Furniture uses the double-declining-balance method for other similar assets. At what net amount will Chicago Furniture record the truck on its statement of financial position at December 31, 2013?
a.$60,000
b.$30,000
c.$27,500
d.$36,650
147.As a recent graduate of State University you're aware that IFRS requires component depreciation for plant assets. A friend has asked you to succinctly explain what component depreciation means. Which of the following correctly describes component depreciation?
a.The method used to ensure that the depreciation rate remains constant from year to year.
b.The method that requires that significant parts of a plant asset with different useful lives be depreciated separately.
c.The method used to prorate annual depreciation on a time basis.
d.The method of depreciation recommended for an asset that is expected to be significantly more productive in the first half of its useful life.
148.Salem Company hired Kirk Construction to construct an office building for ?9,600,000 on land costing ?2,400,000, which Salem Company owned. The building was complete and ready to be used on January 1, 2014 and it has a useful life of 40 years. The price of the building included land improvements costing ?720,000 and personal property costing ?900,000. The useful lives of the land improvements and the personal property are 10 years and 5 years, respectively. Salem Company uses component depreciation, and the company uses straight-line depreciation for other similar assets. What total amount of depreciation expense would Salem Company report on its income statement for the year ended December 31, 2014?
a.?402,000
b.?240,000
c.?511,500
d.?451,500
149.Salem Company hired Kirk Construction to construct an office building for ?9,600,000 on land costing ?2,400,000, which Salem Company owned. The building was complete and ready to be used on January 1, 2014 and it has a useful life of 40 years. The price of the building included land improvements costing ?720,000 and personal property costing ?900,000. The useful lives of the land improvements and the personal property are 10 years and 5 years, respectively. Salem Company uses component depreciation, and the company uses straight-line depreciation for other similar assets. What is the net amount reported for the building on Salem Company's December 31, 2014 statement of financial position?
a.?9,198,000
b.?9,088,500
c.?7,780,500
d.?9,360,000
150.IFRS allows companies to revalue plant assets to fair value. Which of the following statements is true regarding revaluation?
a.At the time a company purchases an asset it must decide whether to follow revaluation procedures for the asset; once the election is made, it must be followed for the remainder of the asset's useful life.
b.Assets that are experiencing rapid price changes must be revalued quarterly, other assets can be revalued on an annual basis.
c.The journal entry to record a revaluation when the asset's price has increased includes a credit to the account revaluation surplus.
d.All of these answer choices are correct.