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ACG 2021 Chapter 9 (1

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ACG 2021 Chapter 9 (1

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  • July 29, 2024
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  • 2023/2024
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ACG 2021 Chapter 9
A company purchased equipment and incurred these costs:

Cash price, $24,000

Sales taxes, $1,200

Insurance during transit, $200

Annual maintenance costs, $400

What amount should be recorded as the cost of the equipment? - ANS-25,400

price+sales taxes+ins during transit = equipment

A company purchased land for $80,000.

The company also assumes $12,000 of accrued taxes on the property, incurred $5,000 to
remove an old building, and received $2,000 from the salvage of the old building.

At what amount will the land be recorded in the accounting records? - ANS-95,000

In computing depreciation, salvage value is - ANS-an estimate of a plant asset's value at the
end of its useful life.

Recording depreciation each period is necessary in accordance with the - ANS-expense
recognition principle

On September 1 of the current year, a company purchased an asset for $9,000. It has a $1,500
salvage value and a 4-year useful life. How much is the current year depreciation expense using
the straight-line method? - ANS-625


(9000-1500)/4*4/12
=625

A company purchased equipment that has an invoice price of $18,000. It also paid freight
charges of $500 and installation costs of $2,500. The estimated salvage value and useful life
are $3,000 and five years, respectively. Under the straight-line method, how much is annual
depreciation expense? - ANS-3600

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