7) Investments in debt securities can be classified as held to maturity investments. Held to maturity debt securities should be valued at the end of the period at amortized cost which is synonymous with carrying value and book value. (True/False)

8) Equipment was purchased on January 1, 2019 for $800,000. At the time of its purchase, the equipment was estimated to have a useful life of five years and a salvage value of $50,000. The equipment was depreciated using the straight-line method of depreciation through 2021. At the beginning of 2022, the estimate of useful life was revised to a total life of eight years and the expected salvage value was changed to $30,000. The amount to be recorded for depreciation for 2022 is?

9) Montana Company purchased a machine on January 1, 2019, for $800,000. At the date of acquisition, the machine had an estimated useful life of ten years with no salvage. The machine is being depreciated on a straight-line basis. On January 1, 2022, Montana determined that the machine had an estimated useful life of fourteen years from the date of acquisition with no salvage. An accounting change was made in 2022 to reflect this additional information.

What is the amount of depreciation expense for the year ended December 31, 2022?

10) Yellow Inc. is a calendar-year corporation. Its financial statements for the years ended 12/31/20 and 12/31/21 contained the following errors:

2020 2021

Salary Expense $40,000 understatement $60,000 overstatement

Depreciation expense 15,000 understatement 40,000 overstatement

Assume that the 2021 errors were not corrected and that no errors occurred in 2019. By what amount will 2021 income before income taxes be overstated or understated?

11) Accrued taxes payable of $130,000 were not recorded at December 31, 2020. Office supplies on hand of $80,000 at December 31, 2021 were erroneously treated as expense instead of supplies inventory. Neither of these errors was discovered nor corrected. The effect of these two errors would cause retained earnings at December 31, 2021 to be in error by what amount?

12) Blueberry Co. purchased machinery that cost $800,000 on January 1, 2019. The entire cost was recorded as an expense. The machinery has an eight-year life and a $60,000 residual value. The error was discovered on December 20, 2021. Ignore income tax considerations.

Blueberrys income statement for the year ended December 31, 2021, should show depreciation expense of?