1. Luminous Company exchanged its old machinery for new machinery valued at $115,000 on September 1, 2023. The companys old machinery and an additional $95,000 cash were given in exchange. The old machinery originally cost $100,000. It had a fair market value of $20,000 and an accumulated depreciation of $70,000 on the day of the trade. The depreciation has already been updated and the exchange will have no effect on the companys future cash flows. The journal entry to record the transaction will include:

Select one:

a. Debit Accumulated Depreciation Machinery (old) $70,000

b. No gain no loss is recorded

c. Gain on Exchange of Assets $30,000

d. Credit Machinery (old) $70,000

2. On February 1, 2023, Vagabond Holding Company purchased land valued at $400,000, a building valued at $1,000,000 and a parking lot valued at $600,000. Vagabond Holding paid $1,800,000 cash for these three assets. The journal entry for this purchase will include:

Select one:

a. Debit Land $380,000

b. Debit Parking Lot $540,000

c. Credit to Cash of $2,000,000

d. Debit Building $950,000

3. LLL Inc. purchased a machine on October 1, 2022, for use in its factory. The business paid $450,000 for the machine and estimated that it has a useful life of 10 years, at the end of which time the machine is expected to have a residual value of $50,000. During its life, the machine is expected to produce 200,000 units. The machine produced 55,000 units in 2022 and 60,000 units in 2023. The machine is subject to a 20% CCA rate, and LLL Inc.s year-end is December 31. What is the end of 2023 journal entry for the depreciation record under the units-of-production method?

Select one:

a. Debit Depreciation Expense $120,000; credit Accumulated Depreciation $120,000

b. Debit Accumulated Depreciation $2; credit Depreciation Expense $2

c. Credit the specific PPE accounts $45,000; debit Depreciation Expense $45,000

d. Debit Depreciation Expense $110,000; credit Accumulated Depreciation $110,000

4. Alee Inc. is an international producer of aluminum through mining. On January 1, 2023, it spent $10,000,000 cash to purchase a mine with an estimated residual value of zero. The company also incurred additional expenditures of $2,000,000 to prepare the mine for the extraction. Alee Inc. expects to use this mine for 10 years with an expected capacity of 500,000 tonnes over that time. Alee Inc. extracted 20,000 tonnes in the first year; 15,000 tonnes were sold during the year, while the remaining 5,000 tonnes were kept as inventory. What is the journal entry to record the depletion for this year?

Select one:

a. Debit Depletion Expense $240,000; debit Ore Inventory $120,000; credit Accumulated Depreciation $360,000

b. Debit Depletion Expense $480,000; credit Accumulated Depreciation $480,000

c. Debit Depletion Expense $120,000; debit Ore Inventory $360,000; credit Accumulated Depreciation $480,000

d. Debit Depletion Expense $360,000; debit Ore Inventory $120,000; credit Accumulated Depreciation $480,000

5. On December 31, 2018, Tila Company purchased equipment worth $150,000. The equipment has a useful life of five years and $10,000 residual value. Depreciation is recorded beginning the month after acquisition and will be recorded up until the month of disposal. The company uses the straight-line method of depreciation. On June 30, 2023, Tila Company sold the equipment for $5,000. What is the journal entry on June 30 to record the depreciation of the equipment prior to the sale?

Select one:

a. Debit Depreciation Expense $14,000; credit Accumulated Depreciation $14,000

b. Debit Depreciation Expense $30,000; credit Accumulated Depreciation $30,000

c. Debit Depreciation Expense $28,000; credit Accumulated Depreciation $28,000

d. Debit Cash $5,000; debit Accumulated Depreciation $4,000; debit Gain on Disposal of Asset $1,000