Question

1. Erin’s Excavation purchased a bulldozer on May 31, 2019 for $265,000. Erin’s Excavation estimates that they can sell the machine for $22,500 when they are done using it in 10 years. What is the net book value of the bulldozer in the December 31, 2019 balance sheet?
   1. $242,500
   2. $250,854
   3. $240,750
   4. $249,542

2. Refer to the Erin’s Excavation problem in #1 above. How much depreciation expense will be shown in the income statement for the year ended December 31, 2020?
   1. $24,250
   2. $38,396
   3. $14,146
   4. $22,500

3. On July 1, 2019, Big City Bank purchased a new, high-tech copier. The copier cost $4,100 and they incurred the following expenses related to it: shipping fees of $150, sales tax of $335, maintenance costs during 2019 of $175, and installation costs of $220. If the copier has an estimated life of 5 years and no salvage value, then how much accumulated depreciation will be shown on the December 31, 2020 balance sheet?
   1. $1,230
   2. $481
   3. $961
   4. $1,442

4. On which financial statement are capitalized expenditures included?
   1. Income Statement
   2. Statement of Stockholders’ Equity
   3. Balance Sheet
   4. Statement of Cash Flows

Answer 1

1

answer is 250854

Depreciation Base =265000-22500 = 242500

Depreciation = 242500 / 10 = 24250

Depreciation for 7 months = 24250 / 12 x 7 = 14146

Book Value after 1 year = 265000 - 14146 = 250854

2

Answer is 14146

refer above working ans depreciation for 7 month from may

3

The Answer is 481

Cost = 4100 + 150 + 335 + 220 = 4805

Depreciation base = 4805

Useful life = 5

Yearly Depreciation = 4805 / 5 = 961

Asset Purchased From July. So 6 month Depreciations 961 x 6/12 = 481

4

Balance Sheet