8 Johnson Company acquires land and building for $4,000,000 including all fees related to acquisition. The land is appraised at $2,700,000 and the building at $2,100,000. The building is then renovated at a cost of $750,000. What amount is capitalized to the building account? A. $2,078,125 B. $2,500,000 C. $2,375,000 D. $4,000,000 9. Newson's Courier Service recently purchased a new delivery van for $29,000. The van is estimated to have a useful life of 8 years or 250,000 kilometres. The van will have a residual value of $1,000. The company uses the units-of- production method of depreciation. Assuming the van travelled 36,000 kms. during the first year, what is the depreciation expense for the van in year 1? A. $3,625 B. $3,500 C. $4,032 D. $4,176 10. A company decided to use the units-of-production method to calculate depreciation on a car to be driven by the sale manager. The amount of annual depreciation will vary with which of the following? A. Age of the car. B. Balance in accumulated depreciation. C. Number of kilometres the car is driven. D. Amount of maintenance expense incurred on the car. 11. Angstrom Corporation purchased a truck at a cost of $60,000. It has an estimated useful life of five years and estimated residual value of $5,000. At the beginning of year three, Angstrom's managers concluded that the total usefu life would be four years, rather than five. There was no change in the estimated residual value. What is the amount of depreciation that Angstrom should record for year 3 under the straight-line method? A. $8,250 B. $11,000 C. $15,500 D. $16,500 Calculation: ($60,000-{[($60,000-$5,000)+5] x2)-$5,000) + 2 = $16,500 12. How is the matching principle related to the recording of depreciation on tangible operational assets? A. The matching principle requires a company to use the same depreciation. B. Once a particular depreciation method is adopted for a particular asset, the owner must continue to use the same method. C. The accountant who calculates the depreciation may assume that the company will continue in business as long as the estimated useful life of the asset. D. A portion of the cost of the asset should be allocated as an expense for the periods in which the asset helps the business to earn revenue. Life of