Home Assignment 3 Q # 1 Assume that you are the owner of a trucking company that has just invested $150,000 in a new truck. Working with your accountant, you are in the process of estimating its useful life and residual value. Your estimates will be used to compute straight line depreciation expense for financial reporting purposes. What factors should you take into consideration in developing these estimates? Discuss briefly how these factors will influence the amount of depreciation expense reported by your company each year. Q # 2 The following expenditures relating to plant assets were made by Wilson Company during the first 2 months of 2018. 1. Paid $5,000 of accrued taxes at the time plant site was acquired. 2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit. 3. Paid $850 of sales tax on new delivery truck. 4. Paid $17,500 for parking lots and driveways on new plant site. 5. Paid $250 to have company name and advertising slogan painted on new delivery truck. 6. Paid $8,000 for installation of new factory machinery. 7. Paid $900 for one-year accident insurance policy on new delivery truck. 8. Paid $75 motor vehicle license fee on the new truck. a. Explain the application of the cost principle in determining the acquisition cost of plant assets. b. List the numbers of the foregoing transactions, and opposite each indicate the account title to which each expenditure should be debited? Q # 3 In recent years, Pablo Company purchased three machines. Because of heavy turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and each selected a different method. Information concerning the machines is
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