On March 1, 2016, Anniston Company purchased an oil well at a cost of $1,264,000. It is estimated that 180,000 barrels of oil can be produced over the remaining life of the well and the residual value of the well will be $130,000. During 2016, 18,000 barrels of oil were produced and all of these barrels were sold. Which of the following statements is incorrect with respect to the accounting for the oil well? (Do not round your intermediate calculations.)

The inventory of oil was $113,400 at December 31, 2016.

The book value of the oil well decreased $113,400 during 2016.

The 2016 cost of goods sold was $113,400.

The depletion rate is $6.30 per barrel of oil.

On December 31, 2016, Hamilton Inc. sold a used industrial crane for $1,000,000 cash. The original cost of the crane was $5.22 million and its accumulated depreciation equaled $4.31 million on December 31, 2016. What is the gain or loss from the December 31, 2016 equipment sale?

$90,000 gain

$910,000 loss

$90,000 loss

$910,000 gain

The Wilson Company has provided the following information:

Net sales, $110,000

Net operating income, $42,000

Net income, $22,000

Average total assets, $122,000

Average net fixed assets; $82,000

What is Wilson's fixed asset turnover ratio?

0.27

0.90

0.51

1.34

On January 1, 2016, Pyle Company purchased an asset that cost $44,100 and had no estimated residual value. The estimated useful life of the asset is 7 years and straight-line depreciation is used. An error was made in 2016 because the total amount of the assets cost was debited to an expense account for 2016 and no depreciation was recorded. Pretax income for 2016 was $42,100. How much is the correct 2016 pretax income?

$86,200.

$79,900.

$48,400.

$35,800.

A company has some bottling equipment which cost $10.70 million, has a net book value of $5.20 million, estimated future cash flows of $3.92 million, and a fair value of $3.32 million. Which of the following correctly describes the recording of the asset impairment loss?

The loss account is debited for $6.78 million and the asset account is credited for $6.78 million.

The loss account is debited for $1.88 million and the asset account is credited for $1.88 million.

The loss account is debited for $7.38 million and the asset account is credited for $7.38 million.

The loss account is debited for $1.28 million and the asset account is credited for $1.28 million.

Warren Company plans to depreciate a new building using the double declining-balance depreciation method. The building cost is $840,000. The estimated residual value of the building is $54,000 and it has an expected useful life of 20 years.

What is the buildings book value at the end of the first year?

$756,000.

$84,000.

$42,000.

$46,470.

On January 1, 2016, Woodstock, Inc. purchased a machine costing $33,500. Woodstock also paid $1,900 for transportation and installation. The expected useful life of the machine is 6 years and the residual value is $4,200. How much is the annual depreciation expense assuming use of the straight-line depreciation method?

$5,583.

$5,900.

$5,200.

$4,883.