II. Short Answers 1) Describe the general rule for revenue recognition and the exception to that rule for agricultural accounting. (Points: 10) 2) Explain the meanings of the terms "depreciation expense", "accumulated depreciation", "book value", and "market value". (Points: 10) I 3) Explain the meaning of the terms "straight-line method of depreciation", "tax-based depreciation", and "accelerated methods of depreciation". (Points: 10)

1) For each of the cases below, calculate the amount of the gain or loss. (Points: 20) a. A truck with a cost of $32,000 and accumulated depreciation of $15,000 is sold for $15,000. b. A truck with a cost of $32,000 and accumulated depreciation of $15,000 is sold for $18,000. c. A truck with a cost of $32,000 and accumulated depreciation of $15,000 is traded for a new truck. The dealer is giving a trade-in allowance of $15,000 on the old truck and the farmer has to pay $18,000 to buy the new truck. d. A truck with a cost of $32,000 and accumulated depreciation of $15,000 is traded for a new truck. The dealer is giving a trade-in allowance of $18,000 on the old truck and the farmer has to pay $15,000 to buy the new truck. c. Cows with base values of $3,000 were sold for $3,500. f. Cows with base values of $3,000 were sold for $2,700. g. The last time land was appraised, a parcel of land was reported with a market value of $60,000. The land was sold for $56,000. h. The last time land was appraised, a parcel of land was reported with a market value of $60,000. The land was sold for $65,000. 2) Using the straight-line method, calculate the amount of depreciation expense for each asset and prepare a schedule that would be included in the notes to the financial statements. (Points: 35) 2) Calculate Accrual Adjusted Net Farm Income using the appropriate data below. (Points: 15) Gain Due to Changes in General Base Values of Breeding Livestock: $5,000 Income Tax Expense: $5,400 Loss on the Sale of Farm Capital Assets: $1,600 Net Farm Income from Operations: $175,643 Other Revenue: $300 Other Expenses: $160 1) Describe the general rule for revenue recognition and the exception to that rule for agricultural accounting. (Points: 10) 2) Explain the meanings of the terms "depreciation expense", "accumulated depreciation", "book value", and "market value". (Points: 10) 3) Explain the meaning of the terms "straight-line method of depreciation", "tax-based depreciation", and "accelerated methods of depreciation". (Points: 10)