accounting sample midterm2

accounting sample midterm2 - Question 1: Score 0/5 Your...

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Unformatted text preview: Question 1: Score 0/5 Your response The executives for Sea World decided to buy a piece of property adjacent to the park with an old, run-down motel. The cost of the land with the old motel was $1,500,000. Real estate commissions and fees including the title search were $317,850. Sea World paid its attorney $15,000 to review the contract and complete the purchase of the land on July 1, 2008. The resort paid $25,750 for the old motel to be demolished and an additional $17,850 for sugar white sand to be hauled in to prepare the land for use. The company paid $80,000 for some palm trees for the new area. Sea World hired three new employees at a salary of $35,000 a year each to maintain the landscaping for the new area. Requirement 1: What amount should be capitalized for this new asset? (Omit the "$" sign in your response.) Total cost $ (0%) Total grade: 0.01/1 = 0% Feedback: Invoice price $ 1,500,000 Commissions and fees 317,850 Attorney's fees 15,000 Demolition 25,750 Sand 17,850 Landscaping 80,000 Total cost $ 1,956,450 Requirement 2: Would there be any depreciation expense for land at the end of 2008? Your Answer: Choice Selected Yes No Feedback: Land is not depreciated because it has an indefinite life. Question 2: Score 0/5 Your response WTA Tennis Academy purchased a new ball machine at a cost of $18,000 at the beginning of January 2005. The machine was estimated to have a salvage value of $2,000 at the end of its useful life of four years. A machine like this is supposed to deliver 160,000 hours of service. The actual number of hours that the machine was used per year was: Year Hours 2005 40,000 2006 60,800 2007 39,200 2008 20,000 Requirement 1: Calculate the depreciation expense for each year of the four-year life of the ball machine using: (a) Straight-line method (Omit the "$" sign in your response.) Annual depreciation expense $ (0%) Total grade: 0.01/1 = 0% Feedback: Cost $ 18,000 Less : Salvage $ 2,000 Depreciable cost $ 16,000 Estimated useful life 4 Annual depr. expense $ 4,000 Depreciation is $4,000 for each full year that the asset is used. Your response (b) Activity method. (Omit the "$" sign in your response.) Year Annual depreciation 2005 $ (0%) 2006 $ (0%) 2007 $ (0%) 2008 $ (0%) Total grade: 0.01/4 + 0.01/4 + 0.01/4 + 0.01/4 = 0% + 0% + 0% + 0% Feedback: Depreciation per unit: Depreciable cost $ 16,000 No. of hours $ 160,000 Cost per hour $ 0.10 Year No. hours used Depr. per unit Annual depr. expense Accum. Depr. 2005 40,000 0.10 $ 4,000 $ 4,000 2006 60,800 0.10 $ 6,080 $ 10,080 2007 39,200 0.10 $ 3,920 $ 14,000 2008 20,000 0.10 $ 2,000 $ 16,000 Your response (c) Double-declining balance (Omit the "$" sign in your response.) Year Annual depreciation 2005 $ (0%) 2006 $ (0%) 2007 $ (0%) 2008 $ (0%) Total grade: 0.01/4 + 0.01/4 + 0.01/4 + 0.01/4 = 0% + 0% + 0% + 0% Feedback: Straight-line rate: 1/4 = 25% Doubled: 50% Year Rate Book value Annual depreciation Accum. Depr....
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accounting sample midterm2 - Question 1: Score 0/5 Your...

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