ACC 120 Unit Four Exam Review

ACC 120 Unit Four Exam Review - Chapters 8, 9, & 10...

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Problem One: John Wayne Corporation purchased a piece of equipment on April 1, 2009 for $600,000. The equipment has a useful life of 5 years or 2,400,000 units of production, and no estimated salvage value. Compute the depreciation for 2009 and 2010 using the following methods: (a) straight-line, (b) units of production, and (c) double-declining-balance. Assume that the company’s fiscal year corresponds to the calendar year and that 360,000 and 520,000 units were produced in the respective years. Be sure to show all computations in the space provided. a) Straight-Line 2009 (600000 – 0) * 1/5 = 120000 2010 (600000 – 0) * 1/4 = 150000 b) Units of Production 2009 600000 * (360000 / 2400000) = 90000 2010 600000 * (520000 / 2400000) = 130000 c) Double-Declining Balance 2009 (600000 – 0) * 2/5 = 240000 2010 (600000 – 240000) * 2/5 = 144000 d) Using the above calculations, if the company uses Units of Production depreciation method, journalize the depreciation entry as of December 31, 2009. Date Acct Title DR CR 12/31/2009 Depreciation Expense 90000 12/31/2009 Accumulated Depreciation 90000 Problem Two: A Boeing Airplane that cost $800,000 and on which $560,000 of accumulated depreciation had been recorded was disposed of on January 1, the first day of the new fiscal year. Analyze the disposal under each of the following assumptions: a. It was discarded as having no value. b. It was sold for $270,000 cash. c. It was sold for $210,000 cash. d. It was sold for $240,000 cash. Date
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This note was uploaded on 02/24/2011 for the course ACC 120 taught by Professor Parker during the Fall '11 term at Central Piedmont Community College.

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ACC 120 Unit Four Exam Review - Chapters 8, 9, & 10...

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