Exam (elaborations)
ACG 2021 Chapter 9 (1
ACG 2021 Chapter 9 (1
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ACG 2021 Chapter 9A 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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