Question

# 1. Tony Tools Company has a December 31 year end. The company received its property tax...

1. Tony Tools Company has a December 31 year end. The company received its property tax bill for 2021 on March 1, 2021. According to the bill, taxes of \$24,000 for the year ended December 31, 2021 are due by April 30, 2021. On March 1, Tony will record property tax expense of

 \$12,000. \$8,000. \$24,000. \$4,000.

2. Beaches Ltd. reviews its assets every fiscal year for potential asset impairments. In the current year Beaches realized through its impairment assessment that a specialized machine has a recoverable amount of \$360,500. This asset carries a cost of \$890,000 and up-to-date accumulated depreciation of \$549,200. What amount would be reported as an impairment loss on Beaches Ltd. current income statement at year end?

 \$340,800 \$360,500 \$19,700 \$0

3. A truck was purchased for \$15,000, and it was estimated to have a \$3,000 residual value at the end of its useful life. Monthly depreciation expense of \$250 was recorded using the straight-line method. The annual depreciation rate is

 20%. 25%. 2%. 8%.

1) \$4,000

Explanation: As the year ended on 31st December 2020 and received the bill on 1 March 2021, so the total amount of  \$24,000 would be divided on the basis of the months in a year.
Therefore, expenses belonging to year ended 31 dec 2020 = \$24,000 * 10/12 = \$20,000.

& expense to be recorded on 1 March 2021 is
=\$24,000 * 2/12 = \$4,000.

2) \$0

Explanation: As, the carrying cost - accumalated depreciation is more than the recoverable value so we will not record any impairment loss.

\$890,000 - \$549,200 > \$360,500.

3) 25%
​​​​Explanation: Annual depreciation = (Cost - Residual value) * Rate of depreciation

(\$250 * 12) = (\$15,000 - \$3,000) * Rate of Depreciation

Rate of depreciation = \$3,000 / \$12,000

Rate of depreciation = 0.25 or 25%

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