Homework Quiz—16 S11 Section 3

Homework Quiz—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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This note was uploaded on 03/03/2012 for the course MGMT 351 taught by Professor Staff during the Spring '08 term at Purdue University-West Lafayette.

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Homework Quiz—16 S11 Section 3 - Spring...

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