1. In 2018, J.R. Enterprises purchases an oil well for $300 million. It is estimated that 5 million barrels can be extracted from the well and that the estimated residual value of the well will be $0. Depletion (depreciation) expense during 2018, when 150,000 barrels were extracted and sold, totaled (use the production method):

a. $6,000,000 c. $9,000,000

b. $10,000,000 d. $2,000,000

2. The Land account would include all of the following costs except:

a. the cost to clear trees on the land to build

b. the cost of building a parking lot on the land

c. title fees paid at closing to acquire the land

d. the cost of tearing down an old structure to clear the land to build

3. Compton Contractors acquired a used storage building that was in poor physical condition due to inadequate maintenance and vandalism. Before placing the building in use, Compton spent several thousand dollars replacing broken windows, painting the building, and installing new support beams. These fix-up expenditures should be recorded by debiting which of the following accounts?

a. Land Improvements c. Accumulated Depreciation, Building

b. Building d. Repair Expense

4. B Company purchased a machine on January 1, 2016 for $4,000. The original estimated useful life was

five years, and an estimated residual value of $1,000. B Company uses straight-line depreciation. On January 1, 2018 (2 years later), B increases the estimated useful life by 3 years, but the residual value remains at $1,000. B Company should now record how much depreciation in 2018?

a. $400 c. $300

5. $360 d. $467