Fundamental Accounting Principles Volume 2 17th Edition By Kermit D. Larson test bank

82)  Xeno Co. incurred the following transactions concerning its machinery:



Jan 1, 2021
Purchased a machine for $60,000 cash, and also paid $3,000 cash to have it installed. Estimated useful life is 10 years and residual value is $3,000. Straight line depreciation is used.

Jan 1, 2022
The machine’s useful life was changed from 10 years to 9.

Jan 8, 2023
Paid $3,800 to replace a motor in the machine. This was considered a major overhaul.


 Xeno Co uses the calendar year as its fiscal year. Prepare the journal entry to record depreciation expense for 2021, 2022 and 2023. Round all values to the nearest dollar.













83)  On January 1, 2019, Friar Company purchased a machine for $180,000 that was expected to last 6 years and have a residual value of $16,000. On January 4, 2022, Friar Company paid $25,000 for improvements to the machine, which increased the total estimated useful life from 6 to 10 years and increased the residual value to $19,500. Friar uses straight-line depreciation. (1) What account should be debited in the journal entry to record the $25,000 improvements? (2) What amount of depreciation expense should be recorded for 2022?













84)  Explain depreciation and the elements affecting its calculation.













85)  Compare the three different depreciation methods: straight-line, units of production, and double-declining balance.













86)  Explain how each of the following depreciation methods is calculated: straight-line, units-of-production, and double-declining-balance.













87)  Chervinski Industries recently paid $560,000 to buy a building that has an estimated useful life of 40 years and a residual value of $116,000. Calculate the depreciation expense for the third year after acquisition using double-declining-balance depreciation. Assume a full year of depreciation in the first year.













88)  Dersch Co. purchased a machine on January 1, 2019, for $2,500,000. Using the table below, calculate the annual depreciation expense for each year of the machine's life (estimated at 5 years or 50,000 hours with a residual value of $150,000). During the machine's life, it was used 15,000; 14,000; 10,000; 9,000; and 6,000 hours.













89)  Twilight Manufacturing's property, plant and equipment records reveal the following information:



Equipment
Cost
Residual Value
Purchase Date
Depreciation Method
Estimated Useful Life
Units Produced in 2014

(1)
60,000
12,000
December 1, 2019
Straight Line
5 years
2,000

(2)
70,000
8,000
October 18, 2020
Units of Production
50,000 units
5,000

(3)
130,000
-
June 12, 2020
Double Declining Balance
10 years
6,000

(4)
100,000
10,000
May 3, 2020
Straight Line
8 Years
8,000


 Calculate the depreciation expense for each equipment item for the year ended December 31, 2020, using the nearest whole month method.













90)  Voltarin Co purchased a machine for $625,000 on November 2, 2022. The company expects the machine to last for 10 years or 50,000 hours of operation, with an estimated residual value of $15,000. During 2022 the computer was operated for 3,000 hours, while in 2023 it was operated for 2,600 hours. Calculate the depreciation expense for the computer for 2022 and 2023 using the following depreciation methods:

(a) Straight-line
(b) Double-declining-balance
(c) Units-of-production













91)  On January 1, 2022 a machine costing $330,000 with a 4-year service life and an estimated $3,000 residual value was purchased. It was also estimated that the machine would produce 50,000 units during its life. The actual units produced during its first 2 years of operation were 9,000 and 10,000 respectively. Calculate the amount of depreciation expense for the 2022 and 2023 under each of the following assumptions:

(a) Straight-line.
(b) Double-declining-balance.
(c) Units-of-production.