1.. Orange Corp. constructed a machine at a total cost of $74 million. Construction was completed at the end of 2014 and the machine was placed in service at the beginning of 2015. The machine was being depreciated over a 8-year life using the sum-of-the-years'-digits method. The residual value is expected to be $5 million. At the beginning of 2018, Orange decided to change to the straight-line method. Ignoring income taxes, what will be Orange's depreciation expense for 2018?(Do not round your intermediate calculation and round final answer to 1 decimal place.)

Multiple Choice

• $6.8 million.
• $11.8 million.
• $5.8 million.
• $8.6 million.

2.. Moonland Company's income statement contained the following errors:

Ending inventory, December 31, 2018, understated by $6,500

Depreciation expense for 2018 overstated by $1,800

What is the effect of the errors on 2018 net income before taxes?

Multiple Choice

• Understated by $8,300.
• Overstated by $8,300.
• Understated by $4,700.
• Overstated by $4,700.

3.. Berkshire Inc. uses a periodic inventory system. At the end of 2017, it missed counting some inventory items, resulting in an inventory understatement by $600,000. Assume that Berkshire has a 40% income tax rate and that this was the only error it made.

If undetected, what is the effect of this error on Berkshire's December 31,2017 balance sheet?

Multiple Choice

• None of these answer choices are correct.
• Assets understated by $600,000, liabilities understated by $240,000 and shareholders' equity understated by $360,000.
• Assets understated by $600,000 and shareholders' equity understated by $600,000.
• Assets understated by $360,000 and shareholders' equity understated by $360,000.

4.. Kramer Inc. had 87 million shares of common stock, 1 million shares of 6%, $100 par, cumulative preferred stock, and 1 million shares of 8%, $100 par, noncumulative preferred stock outstanding at the end of 2017 and 2018. No dividends were declared or paid on common stock in either year. In 2018, a $2.2 million dividend was paid on the 6% preferred stock and a $3.2 million dividend was paid on the 8% preferred stock. Net income for 2018 was $292 million. The company's tax rate is 30%.

Required:

Compute basic earnings per share for the year ended December 31, 2018.