1. On January 1, the Rhode Island Redbirds organization purchased new workout equipment for its athletes. The equipment had a cost of $15,600, transportation costs of $450, and set up costs of $290. The Redbirds spent $350 training their trainers and athletes on its proper use. The useful life of the equipment is five years and has no residual value. How much

depreciation expense should the Redbirds take in the first year, if straight- line is being used?

a. $3,120 b. $3,268

c. $3,338 d. $3,210

2. See the information in number 1 above. Assume the Redbirds decide to use the double-declining balance depreciation method instead. What would Year 1 depreciation expense be? a. $6,420 b. $6,676 c. $6,240 d. $6,536

3. Kite Corporation wishes to trade equipment it owns for a vehicle owned by the Runner Corporation. Kites equipment has a book value of $4,000 and a fair value of $4,500. Runners vehicle has a book value and fair value of $5,100. Kite agrees to pay Runner $600 in cash in addition to giving up the equipment. What would be Kites gain or loss on this exchange? a. $500 b. $100 c. $1,100 d. $600

4. At the beginning of the year, the Kelvin Company owned equipment that appeared on its balance sheet as such: Equipment $7,000,000 Accumulated Depreciation ($2,000,000) The equipment was purchased two years ago and assigned a useful life of six years and a salvage value of $1,000,000. During the first month of the year, Kelvin made modifications to the equipment that increased its remaining useful life from four years to five years. Its salvage value remained unchanged. The cost of these modifications was $50,000. What would be the balance in the accumulated depreciation account of this equipment on 12/31 of that year?

a. $2,760,000 b. $3,000,000 c. $810,000 d. $2,000,000

5. On January 3, 20X1, Jewels Inc. purchases a South American mine found to be rich in amethyst for $560,000. Once all the amethyst has been removed, the land is estimated to be worth only $100,000. Experts predict that the mine contains 4,000 pounds of amethyst. Jewels plans on completing the extraction process in four years. No amethyst was extracted during 20X1. What would accumulated depletion be on 12/31/X1? a. $115,000 b. $115 c. $140 d. $0

6. Maxwell Corporation wishes to sell a building it has owned for five years. It was purchased for $430,000. Maxwell performed additional modifications to the building, which totaled $45,000. On the proposed date of sale, the accumulated depreciation on the building totaled $75,000. The proposed sales price of the building is $380,000. Maxwell is trying to determine the income statement effect of this transaction. What would be Maxwells gain or loss on this sale? a. $20,000 loss b. $25,000 gain c. $50,000 loss d. $95,000 loss