1. On August 1, 2015, Toy Inc. purchased a new piece of equipment that cost $25000. The estimated useful life is five years and the estimated residual value is $2,500. During the five years of useful life the equipment is expected to produce 10,000 units. If the company uses the double declining balance method of depreciation, what is the depreciation expense for the year ended December 31^st, 2016?

Multiple Choice

$15,000

None of the other alternatives are correct

$6,000

$8,333 (Incorrect)

$5,400 2. Logan Logistics Ltd. has a fleet of delivery vehicles that are traded in when they reach 200,000 km. Truck #3846 is traded in for a new identical model #9929. The accounting records show the following data for this transaction:

#3346 cost = $80,000 #3346 accumulated depreciation = $67,170 Cash paid by Logan to seal the deal = $61,750 Sticker price (Manufacturers Suggested Retail Price) for # 9929 = $92,000

Required 1: What amount should #9929 be capitalized at? $ 140920 (incorrect)

Required 2: What is the net book value of the asset at the moment of the disposition? If negative use the minus sign "-" $ 12830 (correct)

Required 3: What gain (loss) will Condor show in accounting for the disposal of the asset? If negative use the minus sign "-" $ 3630 (incorrect)

3. Which of the following is true with regards to change in depreciation method used by a company?

Multiple Choice

A change in depreciation method is accounted for retroactively.

A change in depreciation method is accounted for prospectively. (incorrect)

A company cannot change the depreciation method used mid-way through a capital asset's life.

A company can change the depreciation method used for a capital asset every year during the asset's useful life and this is not problematic at all.

None of the other alternatives are correct