A.

Ellory Company purchased a truck on September 1, Year 1. The truck cost $114,000 and was expected to have a residual value of $14,000 at the end of four years. Ellory uses the 150%-declining-balance depreciation method. Ellory depreciates to the nearest month.

What amount of depreciation should Ellory record on the truck in Year 1? $________________

What is the book value of the truck after depreciation for Year 2 has been recorded?$______________

B.

Lamar, Inc. purchased ten air conditioning units for $5,000 each, with an average expected service life of eight years and a residual value of $700 each.

Compute the depreciate rate using the group depreciation method: _______%

Prepare the journal entry to record the sale of one of the air conditioning units for $3,500 at the end of Year 3.

C.

On 1/1/Year 1, Kramerica, Inc. bought a machine for $250,000. At that time, the estimated useful life was 10 years, and the estimated salvage value was $30,000. In Year 5, after four years had been depreciated, it was determined that the remaining useful life of the machine was 8 years with a $10,000 salvage value. Compute the Year 5 depreciation expense. $_______________________

D.

Herbert Company owns equipment with a book value of $2,000,000. Because of technological changes, Herbert believes the machinery may be impaired. The machinery will have a remaining life of 6 years and will produce net cash flows of $300,000 each year. Using a discount rate of 12%, the present value of the cash flows is $ $1,233,422. Compute the amount of the impairment loss, if any. $_________________