Test 3 ABO exam questions and answers graded A+

Test 3 ABO exam questions and answers graded A+ ABO purchased a truck at the beginning of 2020 for $140,000. They sold the truck at the end of 2023 for $65,000. If the expected useful life of the truck was six years with a residual value of $20,000 and ABO uses straight-line depreciation, which of the following is true regarding the entry to record the sale of the truck? - Depreciation expense = ($140,000 - $20,000)/6 years = $20,000/year. After four years accumulated depreciation = $80,000 and book value of truck = $140,000 - $80,000 = $60,000. If sold for $65,000 then gain = $5,000. The correct answer is: Credit Gain $5,000. OAK purchased a delivery truck on July 1, 2021. The following information is available: Cost = $100,000 Estimated service life = 5 years Estimated residual value = $20,000 Calculate the balance of accumulated depreciation on December 31, 2022, using straight-line depreciation. - SL depreciation = ($100,000 - $20,000)/5 years = $16,000/year After 1.5 years, accumulated depreciation would be $24,000. 2021 depreciation = $16,000 x 6/12 = $8,000 + $16,000 for 2022 The correct answer is: $24,000 Stanley borrows $300,000 to be paid off in three years. The loan payments are semiannual with the first payment due in six months, and interest is at 6%. What is the amount of each payment? - PV = PMT x Table 4 Factor (n = 6, I = 3%) $300,000 = PMT x 5.41719 PMT = $300,000/5.41719 = $55,379 The correct answer is: $55,379 Wilson Inc. owns equipment for which it originally paid $70 million and has recorded accumulated depreciation on the equipment of $12 million. Due to adverse economic conditions, Wilson's management determined that it should assess whether an impairment should be recognized for the equipment. The estimated future cash flows to be provided by the equipment total $60 million, and its fair value at that point totals $50 million. Under these circumstances, Wilson: - The equipment is not impaired since the estimated future cash flows of $60 million exceed the current carrying value ($58 million). The correct answer is: Would record no impairment loss on the equipment. On November 1, 2020, NoleC