Practice Problems - Chapter 8 & 9

Practice Problems - Chapter 8 & 9 - 1. Kmac Inc....

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1. Kmac Inc. purchased a machine for $200,000 for its operations and paid delivery costs of $20,000. Kmac spent an additional $10,000 installing the machine for use. What amount should be recorded as the cost of the equipment? a. $200,000 b. $220,000 c. $210,000 d. $230,000 2. Fisher Park Inc. purchased a machine on January 1, 2009 for $100,000. The expected useful life is 4 years and it is expected to have a $10,000 residual value at the end of its useful life. What amount of depreciation expense should Fisher Park report on its income statement for the year ended December 31, 2011 if they use the double declining balance method? a. $25,000 b. $50,000 c. $12,500 d. $87,500 3. Carpool Inc. is considering selling a piece of equipment that was originally purchased on January 1, 2005. The equipment had a purchase price of $200,000 and an estimated useful life of 10 years. Carpool also estimated a residual value of $5,000 when originally put in place. Carpool Inc. has an offer to sell the equipment on June 30, 2010.
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This note was uploaded on 12/17/2010 for the course ACC 311 taught by Professor Charrier during the Fall '08 term at University of Texas at Austin.

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Practice Problems - Chapter 8 & 9 - 1. Kmac Inc....

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