Question

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%.

Answer 1

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%