# Annual amortization expense 36000 purchase cost 10

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1.Annual amortization expense = 36,000 (purchase cost) / 10 (useful life – choose lower of numbers for life)a.= 3,600Hatfield Company purchased a computer on 2008 January 2, for USD 10,000. Thecomputer had an estimated salvage value of USD 3,000 and an estimated useful life of5 years. At the beginning of 2010, the estimated salvage value changed to USD 1,000,and the computer is expected to have a remaining useful life of 2 years. Using thestraight-line method, the depreciation expense for 2010 is:a. USD 1,400.b. USD 1,750.c. USD 2,250.d. USD 1,800.e. USD 3,100.1.First find annual depreciation before change: a.Depreciable base – Salvage value / Useful life i.10,000 – 3,000 / 5 = 1,4002.2ndFind Accumulated depreciable base for 2 years (2008-2010)a.1,400 * 2 = 2,800b.New Depreciable base value is (10,000 (purchase cost) – 2800 (Accumulated depreciable base) = 7,200c.7,200 (depreciable base) – 1,000 (salvage value) / 2 (years) = 3,100 Depreciable expense for 2010
MODULE 6: Chapter 12 and 13:True-false
Indicate whether each of the following statements is true or false.FALSE - A person may favor the corporate form of organization for a risky businessenterprise primarily because a corporation's shares can be easily transferred.
is that stockholders can lose only the amount of capital they have invested in acorporation.
assets are entitled to receive the par value of their shares before any amounts aredistributed to creditors or common stockholders.
TRUE - When 10,000 shares of USD 20 par value common stock are issued in paymentfor a parcel of land with a fair market value of USD 300,000, the Common Stockaccount is credited for USD 200,000, and the Paid-In Capital in Excess of Par Value—Common account is credited for USD 100,000.Justification: When capital stock is issued for property or services, the transaction isrecorded at the fair market value of (1) the property or services received or (2) thestock issued, whichever is more clearly evident. Common stock (\$20 Par value * 10,000 shares) = \$200,000 | Paid-in Capital in Excess of Par value (\$300,000 - \$200,000 (common stock) = \$100,000Multiple-choiceSelect the best answer for each of the following questions.Which of the following is not an advantage of the corporate form of organization?a. Continuous existence of the entity.b. Limited liability of stockholders.c. Government regulation.d. Easy transfer of ownership.