25.Calculate depreciation expense for each of the first two full years of life for an airplane with a cost of $600,000, residual value of $40,000, and an estimated life of 4 years under the double-declining-balance depreciation method.
26.Courtney Corp. has significant stock that can be issued by the company. The managers are planning to sell the stock for a large profit by fraudulently inflating reported earnings. They plan to sell the stock after current earnings are reported, then leave for the carnival in Brazil. To accomplish their devious plans, they purchased inventory for $800,000 and charged the inventory purchase to equipment that is being depreciated using the straight-line method with a life of 8 years and no salvage value. If beginning and ending inventories were correctly stated and a full year's depreciation is recognized on the equipment, what is the amount of Courtney’s current net income overstatement?
27.Raymond Corporation is a new business that recycles consumption leftovers. The investors in Raymond’s stock, expecting losses in the early stages of business, are impressed with its early net incomes resulting in the ballooning of its stock price to $32 a share. During the second year of operations, Raymond’s reported net income of $1,300,000. However, a few months later, independent auditors reported existence of accounting irregularities concerned with the capitalization of $3 million dollars of expenditures to Raymond’s land account that should have been expensed. What is the appropriately adjusted net income for the second year of operations?
28.The balance in accumulated depreciation on January 1 and December 31 is $60,000 and $70,000, respectively, during a year in which an asset with a cost of $20,000 and net book value of $5,000 was sold for $3,000. Calculate the amount of depreciation expense for the current year.
Use the information that follows to answer problems 29 through 31
.
Laney Inc. and Monroe Company each ordered a new computer on January 1, 2009. The cost of each computer was $3,500. The economic life expectancy of each computer is three years with a $500 expected salvage value. During the current year Laney and Monroe experienced identical operating events with the only difference being that Laney used the straight-line depreciation method, while Monroe used the double-declining-balance depreciation method. Both became disenchanted with their computers during the year due to the introduction of a new generation of computers, and on December 31, 2009, each sold the computer for $800.
29.Calculate Laney’s depreciation expense and loss (gain) from the disposal of the computer.
30.Calculate Monroe’s depreciation expense and loss (gain) from the disposal of the computer.
31.Indicate how the current year's net income statements for Laney and Monroe would differ.