Problem 1

On January 1,2014, Peace Corporation bought machinery under a contract that required a down
payment of 50,000, plus 24 monthly payments of 25,000 each, for total cash payment of 650,00. The
cash equivalent price of the machinery was 550,000. The machinery has an estimated useful life of 1
years and estimated salvage value of25, 000. Peace uses the straight line method of depreciation.

How much should Peace report in its 2014profit or loss as depreciation for the machinery?

a. 52,500

b. 55,000

c. 62,500

d. 65,000

Problem 2

On January 1, 2014, Shawn Company purchased a machine for 504,000 that was placed in
service on March 1, 2014. Additional cost incurred to bring the asset to its location and prepare for its
intended use were: Shipping, 4,000 and installation and testing cost, 6,000. The estimated useful life of
the asset was 10 years and has an estimated salvage value of 34,000.

What amount of depreciation should be recognized for the year ended December 31, 2014?

a. 40,000

b. 42,000

c. 44,000

d. 48,000

Problem 3

On January 2, 2012, Protein Company purchased a transportation equipment costing 2,400,000.

As a result of the change in the estimated useful life of the asset, what is the carrying value o the
transportation equipment as of December 31, 2014.

a. 1,200,000

b. 1,350,000
 c. 1,500,000

d. 1,800,000

Problem 4

Calories Company purchased an equipment for 540,000 on January 2, 2013. The equipment has
an estimated salvage value of 60,000and an estimated useful life of 5 years. The equipment is being
depreciated using the sum-of-years-digit method.

What is the carrying amount value of the equipment on December 31, 2014?

a. 156,000

b. 252,000

c. 380,000

d. 412,000

Problem 5

On May 1, 2014, Norfat Company purchased a new machinery for 2,700,000. The machinery has
an estimated useful life of 7 years and depreciation is computed using the sum-of-years digit method.
Estimated salvage value of the machinery is 180,000.

What is the total accumulated depreciation on December 31,2015?

a. 900,000

b. 960,000

c. 990,000

d. 1,170,000

Problem 6

On January 2, 2012,Phosphorous Company acquired equipment to be used in its manufacturing

What was the acquisition cost of the equipment?

a. 1,650,000

b. 1,700,000
 c. 2,400,000

d. 2,450,000

Problem 7

On January 2, 2013, Iron Company purchased factory equipment for 4,000,0000. Estimated
salvage value was 160,000. Estimated useful life of the equipment is 10 years and will be depreciated
using the double-declining balance method.

What is the amount depreciation to be recognized in year 2014>

a. 384,000

b. 614,400

c. 640,000

d. 768,000

Problem 8

Dreamer Company purchased on October 1, 2013 an equipment for 800,000. The equipment
had an estimated useful life of 8 years. The estimated salvage value was estimated at 50,000 at the end
of its useful life. The equipment is being depreciated using the double declining balance method.

What is the amount of depreciation to be charged against 2014 income?

a. 140,625

b. 175,000

c. 175,781

d. 187,500

Problem 9

On March 1, 2012 Hopeful Company bought an equipment costing 1,200,000. The Hopeful’s
depreciation policy is to depreciate long lived assets using double-declining balance method. The
equipment has an estimated useful life of 10 years with a minimum amount salvage value at the end of
its useful life.

What is the carrying value of the asset as of December 31, 2014?

a. 480,000

b. 614,000
c. 640,000

d. 768,000