3.A building cost $25,000 and has a $5,000 residual value and an expected useful life of ten years. What is the depreciation expense in Year 1 using the Double-Declining-Balance Method at the straight-line rate?

$2,500

None of the other alternatives are correct

$5,000

$2,000

$4,000

4.A gold mine in Africa cost $3M and contains an estimated amount of 1,600,000 tons of gold. In the first year, 300,000 tons of gold were extracted from the mine. What is the depletion expense in the first year?

$ 250,000

None of the other alternatives are correct

$ 562,500

$1,600,000

$ 937,500

5.Kingston Company purchased a machine on January 1, 2015 for $24,000. There is no salvage value and the machine is expected to last ten years. Management typically records depreciation at year end (December 31). On March 1, 2016 Kingston Company sells the machine for $5,000.

What is the appropriate journal entry to record the sale of the machine?

None of the other alternatives are correct

Dr. Accumulated depreciation $4,800. Dr. Cash $5,000. Dr. Loss on Disposal $14,200 Cr. Machine $24,000

Dr. Accumulated depreciation 2,400. Dr. Cash $5,000. Dr. Loss on Disposal $16,600. Cr. Machine $24,000

Dr. Accumulated depreciation $2,800. Dr. Machine $24,000. Cr. Loss on disposal $26,800

Dr. Accumulated depreciation $2,800. Dr. Cash $5,000. Dr. Loss on Disposal $16,200. Cr. Machine $24,000

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.

7.If Toy Inc. uses the straight line method for depreciation, what is the depreciation expense for the year ended, December 31st, 2015:

$1,875

$2,083

$1,500

$4,500

None of the other alternatives are correct

8.At the date of acquisition, depreciable base, also called amortizable amount, equals

None of the other alternatives are correct

asset cost minus estimated residual value

asset cost minus accumulated depreciation

asset cost plus salvage value

asset cost minus depreciation expense

9.The Electric Company buys machinery for $500,000 and gives a promissory note to pay dated 2 years from the purchase date. Interest at 10% and principal are to be repaid at maturity. The life of the asset is also estimated to be two years with no salvage and straight line depreciation is used. We can say that on the purchase date:

The amount shown for the asset on the balance sheet will differ than the amount shown for the liability

The liability will be offset from the asset until paid so initially the transaction will have no effect on total assets

None of the above

The liability will be offset from the asset but the total asset amount will increase by the amount of the discount amortization each period.

The amount shown for the asset on the balance sheet will be the same as the amount shown for the liability