WGU D104 INTERMEDIATE ACCOUNTING II UNITS 4 -6
PRACTICE QUESTIONS AND ANSWERS
, Financial Ratios
Debt to Assets Ratio = Total Liabilities / Total Assets
Times Interest Earned Ratio = Net Income + Interest Expense + Income Tax Expense /
Interest Expense
Debt to Equity Ratio = Total Liabilities / Total Stockholders’ Equity
, Unit 4 Questions
1. BA Goodhuman Corp bought a truck on 1/1/23 for $700,000 and spent an additional $100,000 to
modify the truck to get it ready for use in the business. The truck is expected to be used for seven years
then sold for about $50,000. How depreciation should be recorded in 2024 using: 1) double-declining
method and 2) sum-of-the-years digits?
2. Ojo Corp invested $25mn in a mine estimated to have 10,000,000 tons of mica. In the first year, they
extracted 1,400,000 tons of mica and 600,000 tons in the second year. At the end of the second year, it
is clear there is only about 4,000,000 tons left. What depletion rate should be used starting in the third
year and how much year three depletion would there be if 750,000 tons are extracted?
3. Iceland Company purchased a depreciable asset for $246,000. The estimated salvage value is $24,000,
and the estimated useful life is 15 years. The straight-line method will be used for depreciation. What
is the depreciation base of this asset?
4. India Products purchased a machine for $100,000 on July 1, 2017. The company intends to depreciate
it over 10 years using the double-declining balance method. Salvage value is $10,000. What is
depreciation for 2017? 3. What is depreciation for 2018?
PRACTICE QUESTIONS AND ANSWERS
, Financial Ratios
Debt to Assets Ratio = Total Liabilities / Total Assets
Times Interest Earned Ratio = Net Income + Interest Expense + Income Tax Expense /
Interest Expense
Debt to Equity Ratio = Total Liabilities / Total Stockholders’ Equity
, Unit 4 Questions
1. BA Goodhuman Corp bought a truck on 1/1/23 for $700,000 and spent an additional $100,000 to
modify the truck to get it ready for use in the business. The truck is expected to be used for seven years
then sold for about $50,000. How depreciation should be recorded in 2024 using: 1) double-declining
method and 2) sum-of-the-years digits?
2. Ojo Corp invested $25mn in a mine estimated to have 10,000,000 tons of mica. In the first year, they
extracted 1,400,000 tons of mica and 600,000 tons in the second year. At the end of the second year, it
is clear there is only about 4,000,000 tons left. What depletion rate should be used starting in the third
year and how much year three depletion would there be if 750,000 tons are extracted?
3. Iceland Company purchased a depreciable asset for $246,000. The estimated salvage value is $24,000,
and the estimated useful life is 15 years. The straight-line method will be used for depreciation. What
is the depreciation base of this asset?
4. India Products purchased a machine for $100,000 on July 1, 2017. The company intends to depreciate
it over 10 years using the double-declining balance method. Salvage value is $10,000. What is
depreciation for 2017? 3. What is depreciation for 2018?
