ACCT
ACCTSol72.pdf

# ACCTSol72.pdf - 11 Award 1.00 point On July 2 2013 Sable...

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11. Award: 1.00 point On July 2, 2013, Sable Company purchased a building for \$300,000 that had an estimated residual value of \$46,000 and an expected useful life of ten years. Sable Company has a December 31st, year end. If Sable Company uses the Declining Balance Method at the straight-line rate, the depreciation expense for year two is: \$25,400 \$30,000 \$28,500 \$27,000 None of the other alternatives are correct Year Net Book Value July 2 Depreciation Net Book Value Dec. 31 1 \$300,000 \$15,000 \$285,000 2 \$285,000 \$28,500 \$256,500 Note: The residual value is ignored when a declining balance method is used. Rate: 1/10 = 10% Depreciation: 10%x \$300,000 x 6/12 months= \$15,000 – the straight-line method is used to allocate depreciation within partial periods even when the declining balance method is used for full year amortization.

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12. Award: 1.00 point Miles Company purchased equipment on July 2, 2013 for \$125,000. On acquisition, Miles Company estimated the equipment would be sold for \$25,000 at the end of 10 years. Miles Company uses the
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• One '14
• Depreciation, \$27,000, \$ 2,500, Miles Company, \$25,400, Sable Company

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