SSETS, INTANGIBLES, AND NONMONETARY ExCHANUt An asset is purchased April 1, Year 1, for $75,000 172. A depreciable aset has an and has a n estimated useful life of 7 years. The asset sa salvage value tf asset is being depreciated based on a 10-year life. F GAAP purposes, how much is straight lin ciation expense on the income statement dated December 31, Year 1? A. $10,000 B. $7,500 C. $7,000 D. $5,250 63 For tax purposes, the alue. Under which of the following methods, prop- erly applied, would the accumulated depreciation equal the original cost at the end of the asset's mated useful life? , or I. Sum of the years' digits II. Double declining balance IIL. Straight line A. I and II B. II and I11 Use the following facts to answer Questions 169-170: D. None of the above Chef Giant Inc. uses the sum of the year's digits depre- ciation. In early January of Year 12, Chef Giant Inc. purchased and began depreciating a machine that cost $50,000 and had an estimated salvage value of $5,000. The machine had an estimated life of 5 years. 173. Bruder Inc.bought a battery (plug-in) truck at a cost of $70,000 in January of Year 1, and it is being depreciated using the units of production method. The truck had an estimated useful life of 10 years and a battery with an estimated total capacity of 200,000 miles. In Year 1, the truck is driven 12,000 miles. The salvage value of the truck is S10,000. How much depreciation should 169. How much depreciation expense should be taken on the December 31, Year 12, income statement? be taken in Year 1 based on the units of production A. C 15 DL00 170. How much is the carrying value of the machine on 174. A company use the balance sheet dated December 31, Year 13 (the removing natural resources. Which of the following asset's second year)? A. 328,coe C. I. Depletion base is the cost to purchase the property minus the estimated net residual ie. IL. If the number of units produced exceeds the number of units sold, the depletion expense would be equal to the number of units produced 171. On July 15 of the current year, Pep Power Beverage Corp. purchased a drink color dispersing compo- nent to be attached to its assembly line. The cost of this component was $110,000. Pep also incurred the following costs in connection with the installation of this new component: installation costs $26,000; costs associated with rearranging and overhauling the assembly line $16,000. Adding the drink color 175. Which of the following is correct regarding impair- dispersing component and rearranging the assembly line to incorporate the component into the manu facturing process did not increase the life of the assembly line, but it did help increase productivity and efficiency in the manufacturing process. What amount of these costs should be capitalized? A. I onl C. Both I and II D. Neither I nor Il ment losses under US GAAP? tax if the impairment loss is related to discon- tinued operations. 1. Impairment losses are typically reported before an asset due to a decline in book value below fair value. 11. Impairment losses reduce the carryingvalue of B. C. Both I and II D. Neither I nor II B.7136, ooo 126,0