ACCT 201 FINAL EXAM QUESTIONS
AND ANSWERS
A company had a tractor destroyed by fire. The tractor originally cost $133,000 with
accumulated depreciation of $67,200. The proceeds from the insurance company were
$94,000. The company should recognize: - Answer- gain:$28200
133000-67200=65800
94000-65800=28200
Gain or loss on the disposal of assets is determined by comparing the disposed asset's
book value to the value of any assets received. - Answer- true
Granite Company purchased a machine costing $128,000, terms 3/10, n/30. The
machine was shipped FOB shipping point and freight charges were $2,800. The
machine requires special mounting and wiring connections costing $10,800. When
installing the machine, $2,300 in damages occurred. Compute the cost recorded for this
machine assuming Granite paid within the discount period. - Answer- $137,760.
Cost of Machine = ($128,000 × 0.97) + $2,800 + $10,800 = $137,760
The relevant factors in computing depreciation do not include:
Market value.
Salvage value.
Depreciation method.
Cost.
Useful life. - Answer- market value
A company purchased a weaving machine for $350,170. The machine has a useful life
of 8 years and a residual value of $19,500. It is estimated that the machine could
produce 769,000 bolts of woven fabric over its useful life. In the first year, 114,500 bolts
were produced. In the second year, production increased to 118,500 units. Using the
units-of-production method, what is the amount of depreciation expense that should be
recorded for the second year?
$52,138.
$100,190.
$50,955.
$49,235.
$53,960. - Answer- Depreciation Expense = [(Cost - Salvage Value)/Estimated Useful
Life (in units)] * Units Produced
Depreciation per unit = ($350,170 - $19,500)/769,000 units = $.43 per unit
AND ANSWERS
A company had a tractor destroyed by fire. The tractor originally cost $133,000 with
accumulated depreciation of $67,200. The proceeds from the insurance company were
$94,000. The company should recognize: - Answer- gain:$28200
133000-67200=65800
94000-65800=28200
Gain or loss on the disposal of assets is determined by comparing the disposed asset's
book value to the value of any assets received. - Answer- true
Granite Company purchased a machine costing $128,000, terms 3/10, n/30. The
machine was shipped FOB shipping point and freight charges were $2,800. The
machine requires special mounting and wiring connections costing $10,800. When
installing the machine, $2,300 in damages occurred. Compute the cost recorded for this
machine assuming Granite paid within the discount period. - Answer- $137,760.
Cost of Machine = ($128,000 × 0.97) + $2,800 + $10,800 = $137,760
The relevant factors in computing depreciation do not include:
Market value.
Salvage value.
Depreciation method.
Cost.
Useful life. - Answer- market value
A company purchased a weaving machine for $350,170. The machine has a useful life
of 8 years and a residual value of $19,500. It is estimated that the machine could
produce 769,000 bolts of woven fabric over its useful life. In the first year, 114,500 bolts
were produced. In the second year, production increased to 118,500 units. Using the
units-of-production method, what is the amount of depreciation expense that should be
recorded for the second year?
$52,138.
$100,190.
$50,955.
$49,235.
$53,960. - Answer- Depreciation Expense = [(Cost - Salvage Value)/Estimated Useful
Life (in units)] * Units Produced
Depreciation per unit = ($350,170 - $19,500)/769,000 units = $.43 per unit
