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chapter10a

# chapter10a - Chapter 10 1 Erin Danielle Company purchased...

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Chapter 10 1. Erin Danielle Company purchased equipment and incurred the following costs. Cash price \$24,000 Sales taxes 1,200 Insurance during transit 200 Installation and testing 400 Total costs \$25,800 What amount should be recorded as the cost of the equipment? A. \$24, 000. B. \$25, 200. C. \$25, 400. D. \$25, 800. 2. Depreciation is a process of: valu ation . cost alloc ation . cash accu mula tion. appr aisal. 3. Micah Bartlett Company purchased equipment on January 1, 2007, at a total invoice cost of \$400,000. The equipment has an estimated salvage value of \$10,000 and an estimated useful life of 5 years. The amount of accumulated depreciation at December 31, 2008, if the straight-line method of depreciation is used, is:

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\$80, 000. \$160 ,000. \$78, 000. \$156 ,000. 4. Ann Torbert purchased a truck for \$11,000 on January 1, 2007. The truck will have an estimated salvage value of \$1,000 at the end of 5 years. Using the units-of-activity method, the balance in accumulated depreciation at December 31, 2008, can be computed by the following formula: (\$11, 000 / Tota l esti mate d activ ity) X Unit s of activ ity for 2008 .
(\$10 ,000 / Tota l esti mate d activ ity) X Unit s of activ ity for 2008 . (\$11, 000 / Tota l esti mate d activ ity) X Unit s of activ ity for 2007 and 2008 .

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chapter10a - Chapter 10 1 Erin Danielle Company purchased...

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