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Cutter Enterprises purchased equipment for $72,000 on January 1, 2011. The equipment is expected to have a five-year life and a residual value of $6,000.Using the straight-line method, depreciation for 2012 and the equipment's book value at December 31, 2012 would be:A. $14,400 and $43,200.B. $28,800 and $37,200.C. $13,200 and $39,600.D. $13,200 and $45,600. D. $13,200 and $45,600.[Depreciation, 2012 = ($72,000 - 6,000) ÷ 5 = $13,200Book value, 12/31/12 = $72,000 - (2 × 13,200) = $45,600] Cutter Enterprises purchased equipment for $72,000 on January 1, 2011. The equipment is expected to have a five-year life and a residual value of $6,000.Using the double-declining balance method, depreciation for 2011 and the book value at December 31, 2011 would be:A. $26,400 and $45,600.B. $28,800 and $43,200.C. $28,800 and $37,200.D. $26,400 and $36,600. Cutter Enterprises purchased equipment for $72,000 on January 1, 2011. The equipment is expected to have a five-year life and a residual value of $6,000.Using the sum-of-the-years'-digits method, depreciation for 2011 and book value at December 31, 2011 would be:A. $22,000 and $44,000.B. $22,000 and $50,000.C. $24,000 and $48,000.D. $24,000 and $42,000. B. $22,000 and $50,000.[Depreciation, 2011 = ($72,000 - 6,000) x 5/15 = $22,000Book value, 12/31/2011 = $72,000 - 22,000 = $50,000] Cutter Enterprises purchased equipment for $72,000 on January 1, 2011. The equipment is expected to have a five-year life and a residual value of $6,000.Using the sum-of-the-years'-digits method, depreciation for 2012 and book value at December 31, 2012 would be:A. $19,200 and $30,800.B. $17,600 and $26,400.C. $19,200 and $28,800.D. $17,600 and $32,400.Cutter Enterprises purchased equipment for $72,000 on January 1, 2011. The equipment is expected to have a five-year life and a residual value of $6,000.Using the sum-of-the-years'-digits method, depreciation for 2012 and book value at December 31, 2012 would be:A. $19,200 and $30,800.B. $17,600 and $26,400.C. $19,200 and $28,800.D. $17,600 and $32,400. D. $17,600 and $32,400.[Depreciation, 2012 = ($72,000 - 6,000) x 4/15 = $17,600Book value, 12/31/2012 = $72,000 - 22,000 - 17,600 = $32,400] On June 30, 2011, Prego Equipment purchased a precision laser-guided steel punch that has an expected capacity of 300,000 units and no residual value. The cost of the machine was $450,000 and is to be depreciated using the units-of-production method. During the six months of 2011, 24,000 units of product were produced. At the beginning of 2012, engineers estimated that the machine can realistically be used to produce only another 230,000 units. During 2012, 70,000 units were produced.Prego would report depreciation in 2011 of:A. $36,000.B. $43,900.C. $18,000.D. $21,950. On June 30, 2011, Prego Equipment purchased a precision laser-guided steel punch that has an expected capacity of 300,000 units and no residual value. The cost of the machine was $450,000 and is to be depreciated using the units-of-production method. During the six months of 2011, 24,000 units of product were produced. At the beginning of 2012, engineers estimated that the machine can realistically be used to produce only another 230,000 units. During 2012, 70,000 units were produced.Prego would report depreciation in 2012 of:A. $135,230.B. $126,000.C. $108,000.D. $105,000 Archie Co. purchased a framing machine for $45,000 on January 1, 2011. The machine is expected to have a four-year life, with a residual value of $5,000 at the end of four years.Using the straight-line method, depreciation for 2011 and book value at December 31, 2011, would be:A. $10,000 and $30,000.B. $11,250 and $28,750.C. $10,000 and $35,000.D. $11,250 and $33,750. Archie Co. purchased a framing machine for $45,000 on January 1, 2011. The machine is expected to have a four-year life, with a residual value of $5,000 at the end of four years.Using the double-declining balance method, depreciation for 2011 and book value at December 31, 2011, would be:A. $22,500 and $22,500.B. $22,500 and $17,500.C. $20,000 and $25,000.D. $20,000 and $20,000. Archie Co. purchased a framing machine for $45,000 on January 1, 2011. The machine is expected to have a four-year life, with a residual value of $5,000 at the end of four years.Using the double-declining balance method, depreciation for 2012 and book value at December 31, 2012, would be:A. $10,000 and $5,000.B. $10,000 and $10,000.C. $11,250 and $6,250.D. $11,250 and $11,250. D. $11,250 and $11,250.[Depreciation in 2012 = [($45,000 - (45,000 x 50%)] x 50% = $11,250Book value, 12/31/2012 = $45,000 - 22,500 - 11,250 = $11,250] Archie Co. purchased a framing machine for $45,000 on January 1, 2011. The machine is expected to have a four-year life, with a residual value of $5,000 at the end of four years.Using the sum-of-the-years'-digits method, depreciation for 2011 and book value at December 31, 2011 would be:A. $18,000 and $27,000.B. $16,000 and $29,000.C. $16,000 and $24,000.D. $18,000 and $22,000. Archie Co. purchased a framing machine for $45,000 on January 1, 2011. The machine is expected to have a four-year life, with a residual value of $5,000 at the end of four years.Using the sum-of-the years'-digits method, depreciation for 2012 and book value at December 31, 2012, would beA. $13,500 and $13,500.B. $13,500 and $8,500.C. $12,000 and $17,000.D. $12,000 and $12,000. C. $12,000 and $17,000.[Depreciation in 2012 = ($45,000 - 5,000) x 3/10 = $12,000Book value, 12/31/2012 = $45,000 - 16,000 - 12,000 = $17,000] On September 30, 2011, Bricker Enterprises purchased a machine for $200,000. The estimated service life is 10 years with a $20,000 residual value. Bricker records partial-year depreciation based on the number of months in service.Depreciation for 2011, using double-declining balance, would be:A. $40,000.B. $10,000.C. $36,000.D. $9,000 On September 30, 2011, Bricker Enterprises purchased a machine for $200,000. The estimated service life is 10 years with a $20,000 residual value. Bricker records partial-year depreciation based on the number of months in service.Depreciation for 2012, using double-declining balance, would be:A. $32,000.B. $34,000.C. $38,000.D. $40,000. On September 30, 2011, Bricker Enterprises purchased a machine for $200,000. The estimated service life is 10 years with a $20,000 residual value. Bricker records partial-year depreciation based on the number of months in service.Depreciation (to the nearest dollar) for 2011, using sum-of-the-years' digits, would be:A. $9,091.B. $24,545.C. $27,273.D. $8,182. On September 30, 2011, Bricker Enterprises purchased a machine for $200,000. The estimated service life is 10 years with a $20,000 residual value. Bricker records partial-year depreciation based on the number of months in service.Depreciation (to the nearest dollar) for 2012, using sum-of-the-years' digits, would be:A. $31,909.B. $29,455.C. $35,456.D. $54,000. Gulf Consulting Co. reported the following on its December 31, 2011, balance sheet:Equipment (at cost).....$700,000In a disclosure note, Gulf indicates that it uses straight-line depreciation over five years and estimates salvage value as 10% of cost. Gulf's equipment averages 3.5 years at December 31, 2011. What is the book value of Gulf's equipment at December 31, 2011?A. $490,000B. $441,000C. $259,000D. $210,000 On March 31, 2011, M. Belotti purchased the right to remove gravel from an old rock quarry. The gravel is to be sold as roadbed for highway construction. The cost of the quarry rights was $164,000, with estimated salable rock of 20,000 tons. During 2011, Belotti loaded and sold 4,000 tons of rock and estimated that 16,000 tons remained at December 31, 2011. At January 1, 2012, Belotti estimated that 20,000 tons still remained. During 2012, Belotti loaded and sold 8,000 tons.Belotti would record depletion in 2011 of:A. $41,000.B. $32,800.C. $30,750.D. $24,600. On March 31, 2011, M. Belotti purchased the right to remove gravel from an old rock quarry. The gravel is to be sold as roadbed for highway construction. The cost of the quarry rights was $164,000, with estimated salable rock of 20,000 tons. During 2011, Belotti loaded and sold 4,000 tons of rock and estimated that 16,000 tons remained at December 31, 2011. At January 1, 2012, Belotti estimated that 20,000 tons still remained. During 2012, Belotti loaded and sold 8,000 tons.Belotti would record depletion in 2012 of:A. $54,667.B. $65,600.C. $52,480.D. $55,760. On March 31, 2011, M. Belotti purchased the right to remove gravel from an old rock quarry. The gravel is to be sold as roadbed for highway construction. The cost of the quarry rights was $164,000, with estimated salable rock of 20,000 tons. During 2011, Belotti loaded and sold 4,000 tons of rock and estimated that 16,000 tons remained at December 31, 2011. At January 1, 2012, Belotti estimated that 20,000 tons still remained. During 2012, Belotti loaded and sold 8,000 tons.The legal life of a patent is:A. Forty years.B. Twenty years.C. Life of the inventor plus fifty years.D. Indefinite. C. $122,500.[The depreciation for 2009 and 2010 was 2 x [($650,000 - 10,000) ÷ 8] = $160,000. This leaves a book value of $490,000 (i.e., $650,000 - 160,000). The revised life is 6 years and 2 have passed so that the new depreciation would be based on 4 remaining years = $122,500 (i.e., $490,000 ÷ 4) D. $41,000[This is a change in estimate, so the remaining deprecation will be spread over the remaining useful life.Accumulated depreciation at 12/31/2010 = 2 x [($200,000 - 20,000) ÷ 10] = $36,000Book value at 12/31/2010 = $200,000 - 36,000 = $164,000. The revised life is 6 years and 2 have passed, leaving 4 remaining years.Annual depreciation after change in estimate = $164,000 ÷ 4 = $41,000] A. $75,000.[The depreciation for 2009 was: $500,000 x 4/10 = $200,000.The depreciation for 2010 was: $500,000 x 3/10 = $150,000.This leaves a book value of $150,000 ($500,000 - 350,000), so that the new depreciation would be $75,000 ($150,000 ÷ 2).] D. $240,000.[The depreciation for 2009 and 2010 was: $800,000 ÷ 5 = $160,000 per year.This leaves a book value of $480,000 ($800,000 - 320,000) and three years remain in the asset's life. Under SYD, the remaining depreciable base would be multiplied by 3 ÷ (1 + 2 + 3) for 2012, or 3/6 x $480,000 = $240,000 in depreciation.] On January 1, 2009, Al's Sporting Goods purchased store fixtures at a cost of $180,000. The anticipated service life was 10 years with no residual value. Al's has been using the double-declining balance method, but in 2011 adopted the straight-line method because the company believes it provides a better measure of income. Al's has a December 31 year-end. The journal entry to record depreciation for 2011 is:A. Debit: Depreciation expense...23,040; Credit: Accumulated depreciation...23,040B. Debit: Depreciation expense...14,400; Credit: Accumulated depreciation...14,400C, Debit: Accumulated depreciation...28,800; Credit: Retained earnings...28,800D. No entry Robertson Inc. prepares its financial statements according to International Financial Reporting Standards. At the end of its 2011 fiscal year, the company chooses to revalue its equipment. The equipment cost $540,000, had accumulated depreciation of $240,000 at the end of the year after recording annual depreciation, and had a fair value of $330,000. After the revaluation, the accumulated depreciation account will have a balance of:A. $240,000.B. $264,000.C. $270,000.D. None of the above. 