Question

1.Enter Sandman Co. purchased manufacturing equipment from Sad But True Co. on January 1, 20x8 at a total cost of 9,000,000. Enter Sandman uses the straight-line method of depreciation and estimates that the equipment has a useful life of 10 years. On July 1, 20x8 and July 1, 20x9 Enter Sandman performed major regular inspections on the equipment costing 380,000 and 425,000, respectively.The costs of inspection satisfied the recognition criteria for capitalization.How much is the carrying amount of the equipment on December 31, 2009?

a. 7,920,000

b. 7,875,000

c. 7,529,412

d. 7,600,000

2.Tonyo Company uses the composite method of depreciation and has a composite rate of 25%. During 20x1, it sold assets with an original cost of 100,000 (residual value of 20,000) for 80,000 and acquired 60,000 worth of new assets (residual value of 10,000). The original group of assets had the following characteristics:

Total Cost250,000

Total Residual Value30,000

The above original group includes the assets sold in 20x8 but not the assets purchased in 20x8. How much is the depreciation in 20x8?

a. 62,500

b. 52,500

c. 47,500

d. 46,500