Part 1

On January 1, Year 1, Missouri Co. purchased a truck that cost $35,000. The truck had an expected useful life of 10 years and a $3,000 salvage value. The amount of depreciation expense recognized in Year 2 assuming that Missouri uses the double declining-balance method is:

• $5,120.

• $5,600.

• $3,500.

• $7,000.

Part 2

On January 1, Year 1, Phillips Company made a basket purchase including land, a building and equipment for $850,000. The appraised values of the assets are $58,000 for the land, $860,000 for the building and $152,000 for equipment. Phillips uses the double-declining-balance method of depreciation for the equipment which is estimated to have a useful life of four years and a salvage value of $10,000. The depreciation expense for Year 1 for the equipment is: (Round your intermediate percentages to 2 decimal places: ie .054231 = 5.42%.)

• $76,000.

• $38,000.

• $30,196.

• $60,393.

Part 3

On April 1, Year 1, Fossil Energy Company purchased an oil producing well at a cash cost of $7,140,000. It is estimated that the oil well contains 660,000 barrels of oil, of which only 560,000 can be profitably extracted. By December 31, Year 1, 28,000 barrels of oil were produced and sold. The amount of depletion expense for Year 1 on this well would be: (Do not round intermediate calculations.)

• $302,909.

• $357,000.

• $476,000.

• $119,000.

Part 4

Z Company purchased an asset for $32,000 on January 1, Year 1. The asset was expected to have a four-year life and a $5,000 salvage value. The amount of depreciation expense for Year 1 using double-declining-balance would be

• $2,500.

• $4,000.

• $8,000.

• $16,000.