acct229exam2key

# acct229exam2key - Name Section Instructor EXAM 2 Form A...

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Accounting 229 Exam 2A (Ch. 5-8) Fall 2004 1. Use the following information to answer the next 3 questions: (3 pts. each) A company’s schedule of depreciable assets at Dec. 31, 2004 is as follows. The useful life of each depreciable asset is 5 years. Asset Cost Accum. depr. Acquisition date Salvage value A \$ 55,000 \$ 43,120 Jan. 1, 2002 \$ 10,000 B 100,000 64,000 Jan. 1, 2003 20,000 C 70,000 22,400 Jan. 1, 2003 14,000 (A) The company depreciates Asset B using the double-declining balance method. How much depreciation expense should the company record in 2005 for Asset B ? \$ 14,400 2/5 x [100,000 – 64,000] = 14,400 (B) The company depreciates Asset C by the straight-line method. On Oct. 1, 2005, the company sells Asset C for \$24,000 cash. How much gain or loss (specify which) should the company record in 2005 on the disposal of Asset C ? \$ __ 15,200 loss _______________ 70,000 – 14,000 = 11,200 per year A.D. = 2003: 11,200 5 yrs. 2004: 11,200 2005: 8,400 (11,200 x9/12) 30,800 Cost 70,000 - A.D. (30,800) B.V. 39,200 24,000 cash |________________| 15,200 loss (C) Using the same depreciation method as used in 2002, 2003, and 2004, how much depreciation expense should the company record in 2005 for Asset A ? (You must first determine which depreciation method was used.) \$ 1,880 2x[55,000 – 43,120] = 4,752 Depr. Base: 55,000 cost 45,000 depr. base 1880 max (10,000) salvage (43,120) A.D.
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