10. Jasmine Company purchased a depreciable asset for $225,000. The estimated savage value is 15,000, and the estimated useful Ife is 8 years. The double decining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset? A. S56,250 B. $42,188 C. $26,250 D. $39,375 11. Morgan Corporation purchased a depreciable asset for $400,000 on January 1, 2012. The estimated salvage value Is $40,000, and the estimated useful life Is 9 years. The straight-line method s used for depreciation. In 2015 (the beginning of the 4" year), Morgan changed its estimates to a total useful ife of 5 years with a salvage value of $60,000. what is 2015 depreciation expense? A. S110,000 B. $40,000 C. S120,000 D. $60,000 12. Regis Ine, bought a machine on January 1, 2004 for $400,000. The machine had an expected life of 20 years and was expected to have a salvage value or $40,000-a, uly 1,2014 (10 years into the asset's Me), the company reviewed for potential l ts undiscounted future net cash flows totaled $200,000 and its discounted future net cash flows totaled $140,000. It no active market exists for the machine and the company does not plan to dispose of it, what should Regis record as an impairment loss on July 1, 2014? (hint: need to cakculate book value up to date of potential impairment). of the machine and determined that A. S20,000 B. $71,000 C. So D. $11,000 13. On August 31, a hurricane destroyed a retail location of Vinny's Clothier including the entire nventory on hand at the location. The inventory on hand as of June 30 totaled $960,000. Since June 30 until the time of the hurricane, the company made purchases of $255,000 and had sales of $750,000. Assuming the rete of gross profit to selling price is 40%, what is the approximate value of the inventory that was destroyed? A. S615,000 B. $765,000 C. $960,000 D. $544,500 14. Dicer uses the conventional retail method to determine ts ending inventory at cost. Assume the beginning inventory at cost was $260,000 and at retail was $396,000, purchases Curing the current year at cost were $i.370,000 and $2,200,000 at retail, freight-in on these purchases totaled 86,000, sales during the current year totaled $2,000,000, and net markups were $48,000 and net markdowns were $72,000, respectively. What is the ending inventory value at cos A. S371,228 B. $378,092 C. S572,000 D$386,804 15. The replacement cost of an inventory item is below the net realizable value (ceilling) AND below the net realizable value less the normal proft margin (loor). As a result, under the lower-of-cost-or- market method, the inventory item's"market" value sould be A. replacement cost B. original cost C. net realizable value. D. net realizable value less the normal profit margin. 16. Net realizable value is A. selling price plus costs to complete and sel B. acquisition cost plus sts to complete and set. C. selling price less costs to complete and sell.. D. selling price. 17. To produce an inventory valuation which approximates the lower of cost or market using the conventional retail inventory method, the computation of the ratio of cost to retail should A. include markups but not markdowns B. ignore both markups and markdowns C. include markups and markdowns D. include markdowns but not markups. 18. Mckenthaler Company sells product 2005wSC for $40 per unit. The cost of one unit of 2005WSC is $36, and the replacement cost is $35. The estimated cost to dispose of a unit is $s, and the normal profit is $16. At what amount per unit should product 200swSC be reported, applying A. $3 B. $36 C.$16 D. $32
