Quiz 7 Fall 2010 - 5. Douglas Company purchased a machine...

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QUIZ 7 – ACC 311 – Fall 2011 Name: ________________________ ( 5 points each) Questions 1-2 Colorado Company bought a machine for $110,000 cash on January 1, 2012. The estimated useful life was five years, and the estimated residual value was $8,000. 1. What is the depreciation expense for 2012 using the straight-line method_____ 20,400 __________. 2. What is the asset’s Book Value at the end of 2012 (after the 1 st year of depreciation) ____ 89,600 _____________ Questions 3-4 Kansas Company bought a machine for $700,000 cash on January 1, 2012. The estimated useful life was five years, and the estimated residual value was $70,000. 3. What is the depreciation expense for 2012 using the double-declining-balance method ______ 280,000 _________. 4. What is the asset’s Book Value at the end of 2012 (after the 1 st year of depreciation) _____420,000 ____________
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Unformatted text preview: 5. Douglas Company purchased a machine on January 1, 2011, for $400,000. The company bookkeeper incorrectly used a 8-year life instead of a 6-year life to depreciate the machine. The effect of this error on the 2011 financial statements would be an A) overstatement of assets offset by an understatement of stockholders' equity. B) overstatement of assets, income, and stockholders' equity. C) overstatement of assets and an understatement of liabilities. 6. TRUE OR FALSE An expenditure is considered capitalized when it is reported as an expense on the income statement. 7. TRUE OR FALSE Depreciation is the process of estimating a long-lived asset's current and future market value. 8. T RUE OR FALSE The book value of a depreciable asset equals its acquisition cost minus the depreciation expense recorded to date....
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