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Homework Quiz&acirc;€”16 S11 Section 3

# Homework Quiz&acirc;€”16 S11 Section 3 - Spring...

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Spring 2011 Section 3 Homework Quiz —16 Name Section ABC Company acquired put into service a depreciable asset at the beginning of 2009. The asset had a cost of \$900,000, residual value of \$126,000, and expected life of 6 years. At the beginning of 2011 ABC estimated that the remaining life of the asset was 5 years and residual value was \$30,000. Required : 1. Calculate book value for the asset as of the beginning of 2011. \$642,000 \$900,000 – [(\$900,000 - \$126,000) x 2/6] 2. Prepare an entry to record revised depreciation expense for 2011. Debit Credit Depreciation expense [(\$642,000 - \$30,000)/5] 122,400 Accumulated depreciation 122,400 Required : 3. At the beginning of 2009, ABC Company prepaid rental expense by paying \$360,000 for a four - year insurance policy. At the time the insurance policy was purchased, ABC debited Prepaid Insurance and credited Cash \$360,000. ABC forgot to record Insurance Expense and the reduction of Prepaid Insurance for this insurance policy for 2009 and 2010. ABC discovered the error at the

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Homework Quiz&acirc;€”16 S11 Section 3 - Spring...

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