1. Equipment costing $50,000 with a salvage value of $5,000 and an estimated life of 5 years has been depreciated using the straight-line method for 2 years. At the end of the 2nd year (after year 2 depreciation has been recorded) the total estimated life was revised to a total of 7 years (2 years passed and 5 remaining) with a revised salvage value of $2,000. The depreciation expense for year 3 would be:

Your Answer:

2. Elton Co. paid $60,000 for a new printing press. In addition, Elton paid installation costs of $4,000. Before the printing press could be put into production it had to undergo testing and alignment procedures at a cost of $2,000. To pay for the press, the company signed a 1 year note which required interest payments of $3,000. The total cost added to the Equipment account is:

Your Answer:

3. On September 1, 2016, John Co. bought timber rights for $500,000. An additional $40,000 was spent to develop the site. The timber stand is expected to produce an estimated 1,500,000 board feet of lumber and have no salvage value. During 2016, 120,000 board feet were cut and 100,000 were sold. The depletion expense recorded for 2016 would be: (Depletion expense is based on the board feet sold, not the amount of board feet cut).

Your Answer:

4. Goodwill is only recorded if an entire company or business segment is purchased.

Question 4 options:

True

False

12345	Not depreciated, not depleted, not amortized, not tested for impairment
12345	Amortized
12345	Depleted
12345	Tested for impairment
12345	Depreciated

1.	Computer software
2.	McDonald's franchise (perpetual)
3.	Land
4.	Security Fence around your property
5.	Copper deposit