Exam 11: Depreciation and Depletion

Which one of the following statements is not true?

Exhibit 11-2 Bryan purchased a business computer for $4, 500 on August 3, 2010.It has an estimated residual value of $500 and an expected service life of five years.Bryan uses double-declining-balance depreciation computed to the nearest whole month. - Refer to Exhibit 11-2.Depreciation expense for 2011 should be

Exhibit 11-2 Bryan purchased a business computer for $4, 500 on August 3, 2010.It has an estimated residual value of $500 and an expected service life of five years.Bryan uses double-declining-balance depreciation computed to the nearest whole month. - Refer to Exhibit 11-2.Depreciation expense for 2010 was

On January 1, 2010, Danville Corporation acquired a machine at a cost of $60, 000.The machine's service life was estimated to be ten years and its residual value to be $6, 000.The straight-line method was used for depreciation.On January 1, 2015, the machine's remaining service life was estimated at eight years and its residual value at $3, 000.For 2015, in regard to this machine, Danville should record depreciation of

When the expected cost to dismantle and remove an asset exceeds the expected selling price of a depreciable asset, the difference is

Which of the following is not a factor in selecting a depreciation method?

On January 1, 2010, Wheeler, Inc.purchased some equipment for $3, 900.The equipment had an estimated life of five years and an expected residual value of $200.On January, 1, 2012, the estimated total economic life from the original purchase date was changed to six years and the estimated residual value was increased to $300.What is the amount of depreciation expense for the year 2012?

Which one of the following statements is not true?

Generally, IFRS require asset impairments to be recorded sooner than U.S.GAAP requires recognition. Required: Discuss the differences between IFRS and GAAP procedures for identifying and measuring asset impairments, and explain why the IFRS approach is likely to result in write-downs sooner.

On January 1, 2010, the Winter Co.acquired three assets that it intends to combine into a single account and depreciate using the composite depreciation (straight-line)method.The assets have the following characteristics: Asset Cost Residual Value Life 1 \ 100,000 \ 16,000 6 year: 2 90,000 4,000 8 year: 3 62,500 3,700 4 year: Required: a. Determine the composite rate for depreciation of these assets. b. Why did Winter Co. use a composite rate then a group depreciation rate?

The Jeffries Co.purchased a machine on January 1, 2010.The machine cost $495, 000.It had an estimated life of ten years, or 25, 000 units, and an estimated residual value of $45, 000.In 2010, Jeffries produced 3, 000 units. Required: Compute the depreciation charge for 2010 using each of the following methods: a. Double-declining balance method b. Activity method (units of output) c. Sum-of-the-years-digits method d. Straight-line method

Consider the following:

On January 1, 2010, Frommer, Inc.purchased an asset for $32, 000.It was estimated that the asset life was seven years, after which it would have a residual value of $2, 100.Assuming the use of the sum-of-the-years'-digits method, depreciation expense for 2010 would be

An impairment loss must be recognized when an asset's

IFRS require the initial cost of operational assets to be

Exhibit 11-1 On January 1, 2010, Hills purchased equipment for $200, 000.The equipment had an estimated useful life of ten years and an estimated residual value of $40, 000.Use the double-declining-balance method to answer the following question(s). - Refer to Exhibit 11-1.How much depreciation should Hills record on the asset in 2010?

On January 1, 2010, Montana Co.purchased five machines at a price of $10, 000 per machine.Because the estimated life was five years and no salvage value was expected, a group depreciation rate of 20% was used.On January 1, 2012, one of the machines was sold for $5, 000.The correct entry to record the sale of the machine is

IFRS require a review of the parameters used in measuring depreciation

PZ Co.paid $9, 000 for some land that was expected to have 50, 000 units of a natural resource on it.Development costs amounted to $520.It was expected that the land would require $780 of reclamation costs after production.In the first year of mining, 5, 000 units of the natural resource were mined.At the beginning of the second year, it was estimated that only 40, 000 units of the natural resource remained and estimated reclamation costs should be increased to $960.In the second year, 8, 000 units were mined.What was the amount of depletion for the second year?

On June 15, 2010, Jumper Corporation purchased a truck for $50, 000 with an estimated useful life of six years and a residual value of $8, 000.The company uses units-of-production depreciation and estimates the truck will last 300, 000 miles.The truck was driven 20, 000 miles in 2010 and 60, 000 miles in 2011.The accumulated depreciation balance on December 31, 2011, after the adjusting entries have been posted should be