Part 1

A machine is purchased on January 1, 2016, for $96,000. It is expected to have a useful life of five years and a residual value of $8,000. The company closes its books on December 31. Under the double-declining balance method, what is the total amount of depreciation to be expensed during the 2017?

A. $57,600 B. $23,040 C. $38,400 D. $24,000

Part 2

A piece of equipment was acquired on January 1, 2015, at a cost of $36,000, with an estimated residual value of $3,000 and an estimated useful life of six years. The company uses the double-declining-balance method. What is its book value at December 31, 2016?

A. $16,000 B. $12,000 C. $25,000 D. $11,000

Part 3

A trucking company sold its fleet of trucks for $56,400. The trucks originally cost $1,476,000 and had Accumulated Depreciation of $1,283,000 recorded through the date of disposal. What gain or loss did the trucking company record when it sold the fleet of trucks?

A. Gain of $136,600. B. Gain of $56,400. C. Loss of $56,400. D. Loss of $136,600.

Part 4

An asset is purchased on January 1 for $47,200. It is expected to have a useful life of four years after which it will have an expected residual value of $6,500. The company uses the straight-line method. If it is sold for $33,000 exactly two years after it is purchased, the company will record a:

A. loss of $6,150. B. gain of $8,050. C. loss of $8,050. D. gain of $6,150.

Part 5

Your company has net sales revenue of $36 million during the year. At the beginning of the year, fixed assets are $8 million. At the end of the year, fixed assets are $10 million. What is the fixed asset turnover ratio?

A. 4.50 B. 2.00 C. 4.00 D. 3.60