Multiple Choice Question 109

Concord Corporation's comparative balance sheet at December 31, 2018 and 2017 reported accumulated depreciation balances of $1253000 and $890000, respectively. Property with a cost of $74900 and a carrying amount of $57100 was the only property sold in 2018. Depreciation charged to operations in 2018 was

$380800.

$420100.

$345200.

$363000.

Multiple Choice Question 43

On January 1, 2016, Wildhorse Co., purchased a machine (its only depreciable asset) for $870000. The machine has a 5-year life, and no salvage value. Sum-of-the-years'-digits depreciation has been used for financial statement reporting and the elective straight-line method for income tax reporting. Effective January 1, 2019, for financial statement reporting, Wildhorse decided to change to the straight-line method for depreciation of the machine. Assume that Wildhorse can justify the change. Wildhorse's income before depreciation, before income taxes, and before the cumulative effect of the accounting change (if any), for the year ended December 31, 2019, is $720000. The income tax rate for 2019, as well as for the years 2016-2018, is 40%. What amount should Wildhorse report as net income for the year ended December 31, 2019?

$180000

$379800

$432000

$369800

Multiple Choice Question 53

On January 1, 2018, Crane Corporation signed a 10-year noncancelable lease for certain machinery. The terms of the lease called for Crane to make annual payments of $200000 at the end of each year for 10 years with the title passing to Crane at the end of this period. The machinery has an estimated useful life of 15 years and no salvage value. Crane uses the straight-line method of depreciation for all of its fixed assets. Crane accordingly accounted for this lease transaction as a capital lease. The lease payments were determined to have a present value of $1682000 at an effective interest rate of 8%. With respect to this capitalized lease, Crane should record for 2018

interest expense of $112133 and depreciation expense of $98800.

interest expense of $118560 and depreciation expense of $168200.

lease expense of $210000.

interest expense of $134560 and depreciation expense of $112133.