Ch 9 study plan
equals cost minus accumulated depreciation.
equals cost minus accumulated depreciation
. It is the
cost of the asset.
means the asset loses some or all of its revenue generating potential after the end of its useful life.
Asset impairment means the asset loses some or all of its revenue generating potential
the end of its useful life. This occurs
when the sum of expected cash flows from the asset is less than the
of the asset. Neither of these choices are correct.
The Buildings account would include all of the following costs except
the cost of sidewalks
The Buildings account is used to record the cost of purchasing an existing building, plus repairs and other expenditures to put it into
useful condition, or to construct a new building. It would include the cost of architect's fees, building permits, and foundation
preparation. It would
include the cost of sidewalks, which are recorded in the Land Improvements account, which are improvements
to real estate and have a limited useful life.
Recording the cost of a vehicle as an expense will cause
Both of these choices are correct
assets to be understated
net income to be understated
Recording the cost of a vehicle as an expense will cause assets to be understated and will also cause expenses to be overstated,
which results in an understated net income.
Machinery that was purchased for $60,000 has an estimated residual value of $15,000. Its depreciable cost is
The machinery's depreciable cost is
, which is equal to its cost, or purchase price, minus the estimated residual value.
Wemakit Company bought a new machine for its assembly line production process. The machine cost $650,000 and Wemakit spent
$25,000 to have it installed. It has an estimated useful life of 10 years and an estimated residual value of $75,000. Wemakit expects the
machine to be used 8,500 hours each of the first seven years of use and 7,000 hours each of the last three years of use.
Calculate depreciation expense for the tenth year, assuming the machine is used for 7,000 hours, using the production method. (Round
to 2 decimal places for calculations.)
Under the production method, depreciation expense is the actual units of useful life for the year times the depreciation cost per hour.
The depreciation cost per hour is $7.45. It is the depreciable cost of the asset, $600,000 ($650,000 + $25,000 -
), divided by the
estimated units of total useful life of 80,500 hours [(8,500 x 7) + (7,000 x 3)].
The estimated residual value must be deducted when
determining the depreciable cost of the asset
. Depreciation expense for the tenth year is