21.Acme Products Company purchased new depreciable equipment as follows:
Cost$78,000
Residual6,000
Estimated useful life4 years
Estimated total units72,000
Actual Units:
Year 118,000
Year 212,250
What is the depreciation expense for Year 2 using the units-of-production method of depreciation?
a.$30,250
b.$13,230
c.$18,000
d.$12,250
22.Extreme Manufacturing purchased machinery as follows:
Cost$39,000
Residual4,500
Estimated useful life5 years
Under the double-declining-balance method, what will depreciation expense be for
Year 2?
a.$9,360
b.$5,616
c.$1,116
d.$15,600
23.Assume a building was purchased for $250,000 and used for four of its estimated 10-year life. It has residual value of $50,000 and the straight-line method is used for depreciating the building. The book value of the building after the four years' of usage would be reported on the balance sheet at
a.$20,000
b.$80,000
c.$120,000
d.$170,000
24.When a plant asset is sold, the gain or loss on disposal is computed as the difference between
a.fair market value and accumulated depreciation
b.selling price and accumulated depreciation
c.fair market value and selling price
d.selling price and book value
25.Quick Freight Trucking owned a truck which cost $30,000 when it was purchased on January 1, 2007. It had accumulated depreciation of $18,000 at December 31, 2008. The company originally estimated the truck would have a residual value after using it for four years of $3,000. It sold the truck for $22,500 cash on January 1, 2009. The amount of gain (loss) on the sale of the truck was
a.$4,500 gain
b.$19,500 gain
c.$1,500 loss
d.$10,500 gain
26.The systematic allocation of the cost of natural resources to the periods that benefit from their use is known as
a.depreciation
b.depletion
c.amortization
d.matching
27.The systematic allocation of the cost of a patent to the periods that benefit from its use is
a.amortization
b.capitalization
c.depletion
d.depreciation
28.A coal mine asset was purchased for $660,000. Estimated production is 20,000,000 tons after which the mine will be sold for $60,000. During a recent year, 6,500,000 tons of coal were produced and sold. The depletion expense for the year would be
a.$175,500
b.$195,000
c.$214,500
d.$225,000
29.Purple Company owns 25% of the common stock of Marroon after purchasing 45,000 shares of Marroon's stock at a price of $30 per share on January 1, 2007. At the end of the year, Marroon reported net income of $100,000 and paid dividends of $40,000. What is the book value of Purple Company's investment at year-end?
a.$1,410,000
b.$1,450,000
c.$1,365,000
d.$1,350,000
30.When companies have a
temporary
surplus of cash, they often invest it in
a.short-term marketable securities
b.long-term marketable securities
c.intangible assets
d.property, plant, and equipment