Question

7) The book value of a plant asset is defined as:

A) historical cost minus estimated residual value.

B) historical cost minus accumulated depreciation.

C) current sales value minus historical cost.

D) replacement cost minus accumulated depreciation.

8) On January 2, 2019, Konrad Corporation acquired equipment for $500,000. The estimated life of the equipment is 5 years or 18,000 hours. The estimated residual value is $14,000. If Konrad Corporation uses the units of production method of depreciation, what will be the debit to Depreciation Expense for the year ended December 31, 2020, assuming that during this period, the asset was used 6,000 hours?

A) $166,667

B) $97,200

C) $162,000

D) $171,333

9) On January 2, 2019, Kaiman Corporation acquired equipment for $700,000. The estimated life of the equipment is 5 years or 80,000 hours. The estimated residual value is $20,000. What is the balance in Accumulated Depreciation on December 31, 2020, if Kaiman Corporation uses the straight-line method of depreciation?

A) $140,000

B) $136,000

C) $272,000

D) $280,000

Answer 1

7)	option b
	historical cost minus accumulated depreciation
8)	(500,000-14000)/18000
	27
	depreciation expense
	27*6000
	162000
	option c
	162,000
9)	(700,000-20,000)/5
	136000
	Accumulated depreciation
	136000*2
	272000
	option c
	272,000