Depreciation

  63.     Ferguson Company purchased a depreciable asset for $100,000. The estimated residual value is $10,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?

a.   $9,000

b.   $10,000

c.   $90,000

d.   $100,000

  64.     Hamilton Company purchased a depreciable asset for $200,000. The estimated residual value is $20,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?

a.   $18,000

b.   $20,000

c.   $180,000

d.   $200,000

  65.     Solar Products purchased a computer for $13,000 on July 1, 2010. The company intends to depreciate it over 4 years using the double-declining balance method. Residual value is $1,000. Depreciation for 2010 is

a.   $6,500

b.   $3,250

c.   $4,875

d.   $3,000

  66.     Solar Products purchased a computer for $13,000 on July 1, 2010. The company intends to depreciate it over 4 years using the double-declining balance method. Residual value is $1,000. Depreciation for 2011 is

a.   $6,500

b.   $3,250

c.   $4,875

d.   $3,000

  67.     Gardner Corporation purchased a truck at the beginning of 2010 for $75,000. The truck is estimated to have a residual value of $3,000 and a useful life of 120,000 miles. It was driven 18,000 miles in 2010 and 32,000 miles in 2011. What is the depreciation expense for 2010?

a.   $11,250

b.   $10,800

c.   $18,000

d.   $30,000

  68.     Gardner Corporation purchased a truck at the beginning of 2010 for $75,000. The truck is estimated to have a residual value of $3,000 and a useful life of 120,000 miles. It was driven 18,000 miles in 2010 and 32,000 miles in 2011. What is the depreciation expense for 2011?

a.   $20,000

b.   $53,333

c.   $19,200

d.   $32,000

  69.     Kinder Company purchased a depreciable asset for $200,000. The estimated residual value is $10,000, and the estimated useful life is 10,000 hours. Kinder used the asset for 1,100 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset?

a.   $19,000

b.   $20,900

c.   $22,000

d.   $190,000

  70.     Jamar Company purchased a depreciable asset for $150,000. The estimated residual value is $10,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset?

a.   $17,500

b.   $26,250

c.   $28,125

d.   $37,500

  71.     Engels Company purchased a depreciable asset for $600,000. The estimated residual value is $30,000, and the estimated useful life is 10,000 hours. Engels used the asset for 1,100 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset?

a.   $57,000

b.   $62,700

c.   $66,000

d.   $570,000

  72.     Hart Company purchased a depreciable asset for $360,000. The estimated residual value is $24,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset?

a.   $42,000

b.   $63,000

c.   $67,500

d.   $90,000

  73.     On July 1, 2010, Gonzalez Corporation purchased factory equipment for $150,000. Residual value was estimated to be $4,000. The equipment will be depreciated over ten years using the double-declining balance method. Counting the year of acquisition as one-half year, Gonzalez should record depreciation expense for 2011 on this equipment of

a.   $30,000.

b.   $27,000.

c.   $26,280.

d.   $24,000.

  74.     Krause Corporation purchased factory equipment that was installed and put into service January 2, 2010, at a total cost of $60,000. Residual value was estimated at $4,000. The equipment is being depreciated over four years using the double-declining balance method. For the year 2011, Krause should record depreciation expense on this equipment of

a.   $14,000.

b.   $15,000.

c.   $28,000.

d.   $30,000.

  75.     On April 13, 2010, Neill Co. purchased machinery for $120,000. Residual value was estimated to be $5,000. The machinery will be depreciated over ten years using the double-declining balance method. If depreciation is computed on the basis of the nearest full month, Neill should record depreciation expense for 2011 on this machinery of

a.   $20,800.

b.   $20,400.

c.   $20,550.

d.   $20,933.

  76.     Matile Co. purchased machinery that was installed and ready for use on January 3, 2010, at a total cost of $69,000. Residual value was estimated at $9,000. The machinery will be depreciated over five years using the double-declining balance method. For the year 2011, Matile should record depreciation expense on this machinery of

a.   $14,400.

b.   $16,560.

c.   $18,000.

d.   $27,600.

  77.     A plant asset has a cost of $24,000 and a residual value of $6,000. The asset has a three-year life. If depreciation in the third year amounted to $3,000, which depreciation method was used?

a.   Straight-line

b.   Declining-balance

c.   Sum-of-the-years'-digits

d.   Cannot tell from information given

  78.     On January 1, 2010, Graham Company purchased a new machine for $2,100,000. The new machine has an estimated useful life of nine years and the residual value was estimated to be $75,000. Depreciation was computed on the sum-of-the-years'-digits method. What amount should be shown in Graham's balance sheet at December 31, 2011, net of accumulated depreciation, for this machine?

a.   $1,695,000

b.   $1,335,000

c.   $1,306,666

d.   $1,244,250

  79.     On January 1, 2004, Forbes Company purchased equipment at a cost of $50,000. The equipment was estimated to have a residual value of $5,000 and it is being depreciated over eight years under the sum-of-the-years'-digits method. What should be the charge for depreciation of this equipment for the year ended December 31, 2011?

a.   $1,250

b.   $1,389

c.   $2,500

d.   $5,625

  80.     On September 19, 2010, McCoy Co. purchased machinery for $190,000. Residual value was estimated to be $10,000. The machinery will be depreciated over eight years using the sum-of-the-years'-digits method. If depreciation is computed on the basis of the nearest full month, McCoy should record depreciation expense for 2011 on this machinery of

a.   $40,903.

b.   $38,845.

c.   $38,750.

d.   $35,000.

  81.     On January 3, 2009, Munoz Co. purchased machinery. The machinery has an estimated useful life of eight years and an estimated residual value of $30,000. The depreciation applicable to this machinery was $65,000 for 2011, computed by the sum-of-the-years'-digits method. The acquisition cost of the machinery was

a.   $360,000.

b.   $390,000.

c.   $420,000.

d.   $468,000.

  82.     On January 2, 2008, Stacy Company acquired equipment to be used in its manufacturing operations. The equipment has an estimated useful life of 10 years and an estimated residual value of $15,000. The depreciation applicable to this equipment was $70,000 for 2011, computed under the sum-of-the-years'-digits method. What was the acquisition cost of the equipment?

a.   $535,000

b.   $565,000

c.   $550,000

d.   $541,667

  83.     Orton Corporation, which has a calendar year accounting period, purchased a new machine for $40,000 on April 1, 2006. At that time Orton expected to use the machine for nine years and then sell it for $4,000. The machine was sold for $22,000 on Sept. 30, 2011. Assuming straight-line depreciation, no depreciation in the year of acquisition, and a full year of depreciation in the year of retirement, the gain to be recognized at the time of sale would be

a.   $4,000.

b.   $3,000.

c.   $2,000.

d.   $0.

  84.     On January 1, 2010, the Accumulated Depreciation—Machinery account of a particular company showed a balance of $370,000. At the end of 2010, after the adjusting entries were posted, it showed a balance of $395,000. During 2010, one of the machines which cost $125,000 was sold for $60,500 cash. This resulted in a loss of $4,000. Assuming that no other assets were disposed of during the year, how much was depreciation expense for 2010?

a.   $85,500

b.   $93,500

c.   $25,000

d.   $60,500

  85.     During 2010, Noller Co. sold equipment that had cost $98,000 for $58,800. This resulted in a gain of $4,300. The balance in Accumulated Depreciation—Equipment was $325,000 on January 1, 2010, and $310,000 on December 31. No other equipment was disposed of during 2010. Depreciation expense for 2010 was

a.   $15,000.

b.   $19,300.

c.   $28,500.

d.   $58,500.

  86.     Lloyd Company purchased a depreciable asset for £1,360,000. The estimated salvage value is £360,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset?

a.   £125,000

b.   £170,000

c.   £187,000

d.   £255,000

  87.     Kleinschmidt Company purchased a depreciable asset for €2,000,000. The estimated salvage value is €150,000, and the estimated useful life is 400,000 hours. Kleinschmidt used the asset for 35,000 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset?

a.   €160,870

b.   €161,875

c.   €175,000

d.   €350,000

  88.     On January 1, 2005, Fleming Company purchased equipment at a cost of CHF650,000. The equipment was estimated to have a salvage value of CHF55,000 and it is being depreciated over seven years under the sum-of-the-year’s-digits method. What should be the charge for the depreciation of this equipment for the year ended December 31, 2011?

a.   CHF21,250

b.   CHF23,214.

c.   CHF85,000

d.   CHF148,750

  89.     Stevenson Company purchased a depreciable asset for $250,000 on April 1, 2008. The estimated residual value is $25,000, and the estimated useful life is 5 years. The straight-line method is used for depreciation. What is the balance in accumulated depreciation on May 1, 2011 when the asset is sold?

a.   $90,000

b.   $105,000

c.   $123,750

d.   $138,750

  90.     Williamson Corporation purchased a depreciable asset for $300,000 on January 1, 2008. The estimated residual value is $30,000, and the estimated useful life is 9 years. The straight-line method is used for depreciation. In 2011, Williamson changed its estimates to a total useful life of 5 years with a salvage value of $50,000. What is 2011 depreciation expense?

a.   $30,000

b.   $50,000

c.   $80,000

d.   $90,000

  91.     Rollins Company purchased a depreciable asset for $300,000 on April 1, 2008. The estimated residual value is $30,000, and the estimated total useful life is 5 years. The straight-line method is used for depreciation. What is the balance in accumulated depreciation on May 1, 2011 when the asset is sold?

a.   $118,000

b.   $126,000

c.   $148,500

d.   $166,500

  92.     Fanestil Corporation purchased a depreciable asset for $420,000 on January 1, 2008. The estimated residual value is $42,000, and the estimated total useful life is 9 years. The straight-line method is used for depreciation. In 2011, Fanestill changed its estimates to a useful life of 5 years with a residual value of $70,000. What is 2011 depreciation expense?

a.   $42,000

b.   $70,000

c.   $112,000

d.   $126,000

  93.     Archer Company purchased equipment in January of 2000 for $90,000. The equipment was being depreciated on the straight-line method over an estimated useful life of 20 years, with no residual value. At the beginning of 2010, when the equipment had been in use for 10 years, the company paid $15,000 to overhaul the equipment. As a result of this improvement, the company estimated that the useful life of the equipment would be extended an additional 5 years. What should be the depreciation expense recorded for this equipment in 2010?

a.   $3,000

b.   $4,000

c.   $4,500

d.   $5,500

  94.     Marsh Corporation purchased a machine on July 1, 2008, for $750,000. The machine was estimated to have a useful life of 10 years with an estimated residual value of $42,000. During 2011, it became apparent that the machine would become uneconomical after December 31, 2015, and that the machine would have no scrap value. Accumulated depreciation on this machine as of December 31, 2010, was $177,000. What should be the charge for depreciation in 2011?

a.   $106,200

b.   $114,600

c.   $123,000

d.   $143,250

  95.     Rivera Company purchased a tooling machine on January 3, 2004 for $500,000. The machine was being depreciated on the straight-line method over an estimated useful life of 10 years, with no residual value. At the beginning of 2011, the company paid $125,000 to overhaul the machine. As a result of this improvement, the company estimated that the useful life of the machine would be extended an additional 5 years (15 years total). What should be the depreciation expense recorded for the machine in 2011?

a.   $34,375

b.   $41,667

c.   $50,000

d.   $55,000

  96.     Gates Co. purchased machinery on January 2, 2005, for $440,000. The straight-line method is used and useful life is estimated to be 10 years, with a $40,000 residual value. At the beginning of 2011 Gates spent $96,000 to overhaul the machinery. After the overhaul, Gates estimated that the useful life would be extended 4 years (14 years total), and the residual value would be $20,000. The depreciation expense for 2011 should be

a.   $28,250.

b.   $34,500.

c.   $40,000.

d.   $37,000.

  97.     Holcomb Corporation owns machinery with a book value of $190,000. The machinery’s fair value less costs to sell is $175,000, and its value-in-use is $200,000. Holcomb should recognize a loss on impairment of

a.   $   -0-.

b.   $10,000.

c.   $15,000.

d.   $25,000.

  98.     Kohlman Corporation owns machinery with a book value of $190,000. The machinery has a fair value less costs to sell is $175,000, and its value-in-use is $170,000. Kohlman should recognize a loss on impairment of

a.   $     -0-.

b.   $5,000.

c.   $15,000.

d.   $20,000.

  99.     Technique Co. has equipment with a carrying amount of $800,000. The equipment’s fair value less costs to sell is $780,000, and its value-in-use is $815,000. The equipment is expected to be used in operations in the future. What amount (if any) should Technique report as an impairment to its equipment?

a.   No impairment should be reported.

b.   $20,000

c.   $15,000

d.   $35,000

Use the following information for questions 100 and 101.

On January 1, 2011, Fredrichs Inc. purchased equipment with a cost of €3,060,000, a useful life of 12 years and no salvage value. The company uses straight-line depreciation. At December 31, 2011, the company determines that impairment indicators are present. The fair value less cost to sell the asset is estimated to be €2,600,000. The asset’s value-in-use is estimated to be €2,365,000. There is no change in the asset’s useful life or salvage value

100.     The 2011 income statement will report Loss on Impairment of

a.   €0.

b.   €205,000.

c.   €440,000.

d.   €460,000.

101.     The 2012 (second year) income statement will report depreciation expense for the equipment of

a.   €216,667.

b.   €236,364.

c.   €255,000.

d.   €260,000.

102.     On January 1, 2011, W. Poon Inc. purchased equipment with a cost of HK$4,668,000 a useful life of 12 years and no salvage value. The company uses straight-line depreciation. At December 31, 2011, the company determines that impairment indicators are present. The fair value less cost to sell the asset is estimated to be Hk$4,620,000. The asset’s value-in-use is estimated to be HK$4,305,000. There is no change in the asset’s useful life or salvage value. The 2011 income statement will report Loss on Impairment of

a.   HK$0.

b.   HK$26,000.

c.   HK$48,000.

d.   HK$341,000.

103.     On January 2, 2011, Q. Tong Inc. purchased equipment with a cost of HK$10,440,000, a useful life of 10 years and no salvage value. The Company uses straight-line depreciation. At December 31, 2011 and December 31, 2012, the company determines that impairment indicators are present. The following information is available for impairment testing at each year end:

                                                                          12/31/2011                            12/31/2012

            Fair value less cost to sell                   HK$9,315,000                         Hk$8,350,000

            Value-in-use                                        HK$9,350,000                         HK$8,315,000

           

            There is no change in the asset’s useful life or salvage value. The 2012 income statement will report

a.   Recovery of Impairment Loss of HK$3,889.

b.   Impairment Loss of HK$10,000.

c.   Recovery of Impairment Loss of HK$38,889.

d.   Impairment Loss of HK$1,000,000.

104.     On January 2, 2011, Q. Tong Inc. purchased equipment with a cost of HK$10,440,000, a useful life of 10 years and no salvage value. The company uses straight-line depreciation. At December 31, 2011 and December 31, 2012, the company determines that impairment indicators are present. The following information is available for impairment testing at each year end:

                                                                        12/31/2011                              12/31/2012

            Fair value less costs to sell                 HK$9,315,000                         Hk$8,850,000

            Value-in-use                                        HK$9,350,000                         HK$8,915,000

           

            There is no change in the asset’s useful life or salvage value. The 2012 income statement will report

a.   no Impairment Loss or Recovery of Impairment Loss.

b.   Impairment Loss of HK$435,000.

c.   Recovery of Impairment Loss of HK$40,889.

d.   Recovery of Impairment Loss of HK$603,889.

Use the following information for questions 106 and 106.

On January 1, 2011, Edmondton Inc. purchased equipment with a cost of €4,500,000, a useful life of 12 years and no salvage value. The Company uses straight-line depreciation. At December 31, 2011, the company determines that impairment indicators are present. The fair value less cost to sell the asset is estimated to be €3,850,000. The asset’s value-in-use is estimated to be €3,500,000. There is no change in the asset’s useful life or salvage value.

105.     The 2011 income statement will report Loss on Impairment of

a.   €0.

b.   €275,000.

c.   €625,000.

d.   €650,000.

106.     The 2012 (second year) income statement will report depreciation expense for the equipment of

a.   €320,833.

b.   €350,000.

c.   €375,000.

d.   €385,000.

107.     Percy Resources Company acquired a tract of land containing an extractable mineral resource. Percy is required by its purchase contract to restore the land to a condition suitable for recreational use after it has extracted the mineral resource. Geological surveys estimate that the recoverable reserves will be 2,000,000 tons, and that the land will have a value of $1,200,000 after restoration. Relevant cost information follows:

Land                                                          $9,000,000

Estimated restoration costs                        1,800,000

If Percy maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material?

a.   $3.90

b.   $4.50

c.   $4.80

d.   $5.40

108.     In January, 2010, Yoder Corporation purchased a mineral mine for $3,400,000 with removable ore estimated by geological surveys at 2,000,000 tons. The property has an estimated value of $200,000 after the ore has been extracted. The company incurred $1,000,000 of development costs preparing the mine for production. During 2010, 500,000 tons were removed and 400,000 tons were sold. What is the amount of depletion that Yoder should expense for 2010?

a.   $640,000

b.   $800,000

c.   $840,000

d.   $1,120,000

109.     During 2010, Eldred Corporation acquired a mineral mine for $1,500,000 of which $200,000 was ascribed to land value after the mineral has been removed. Geological surveys have indicated that 10 million units of the mineral could be extracted. During 2010, 1,500,000 units were extracted and 1,200,000 units were sold. What is the amount of depletion expensed for 2010?

a.   $130,000.

b.   $156,000.

c.   $180,000.

d.   $195,000.

     

110.     In March, 2010, Maley Mines Co. purchased a coal mine for $6,000,000. Removable coal is estimated at 1,500,000 tons. Maley is required to restore the land at an estimated cost of $720,000, and the land should have a value of $630,000. The company incurred $1,500,000 of development costs preparing the mine for production. During 2010, 450,000 tons were removed and 300,000 tons were sold. The total amount of depletion that Maley should record for 2010 is

a.   $1,374,000.

b.   $1,518,000.

c.   $2,061,000.

d.   $2,277,000.

111.     In 2002, Horton Company purchased a tract of land as a possible future plant site. In January, 2010, valuable sulphur deposits were discovered on adjoining property and Horton Company immediately began explorations on its property. In December, 2010, after incurring $400,000 in exploration costs, which were accumulated in an expense account, Horton discovered sulphur deposits appraised at $2,250,000 more than the value of the land. To record the discovery of the deposits, Horton should

a.   make no entry.

b.   debit $400,000 to an asset account.

c.   debit $2,250,000 to an asset account.

d.   debit $2,650,000 to an asset account.

112.     Balcom Corporation acquires a coal mine at a cost of $500,000. Intangible development costs total $120,000. After extraction has occurred, Balcom must restore the property (estimated fair value of the obligation is $60,000), after which it can be sold for $170,000. Balcom estimates that 5,000 tons of coal can be extracted. What is the amount of depletion per ton?

a.   $102

b.   $170

c.   $100

d.   $124

113.     Balcom Corporation acquires a coal mine at a cost of $500,000. Intangible development costs total $120,000. After extraction has occurred, Balcom must restore the property (estimated fair value of the obligation is $60,000), after which it can be sold for $170,000. Balcom estimates that 5,000 tons of coal can be extracted. If 900 tons are extracted the first year, which of the following would be included in the journal entry to record depletion?

a.   Debit to Accumulated Depletion for $91,800

b.   Debit to Inventory for $91,800

c.   Credit to Inventory for $90,000

d.   Credit to Accumulated Depletion for $153,000

Use the following information for questions 114 and 115.

On January 1, 2011, Miles Inc. purchased equipment with a cost of €3,570,000, a useful life of
15 years and no salvage value. The company uses straight-line depreciation. At December 31, 2011, an independent appraiser determines that the fair value of the equipment is €3,500,000. Miles prepares financial statements using IFRS and elects to revalue the asset.

114.     In the second step of the 2-step revaluation process at the December 31, 2011, the journal entry to revalue the equipment will include a

a.   debit to Depreciation Expense for €357,000.

b.   credit to Equipment for €70,000.

c.   credit to Accumulated Depreciation for €238,000.

d.   credit to Revaluation Surplus for €70,000.

115.     The 2012 (second year) income statement will report depreciation expense for the equipment of

a.   €250,000.

b.   €238,000.

c.   €233,333.

d.   cannot be determined from the information given.

Use the following information for questions 116 and 117.

On January 1, 2011, Fredo Inc. purchased equipment with a cost of €2,550,000, a useful life of
15 years and no salvage value. The company uses straight-line depreciation. At December 31, 2011, an independent appraiser determines that the fair value of the equipment is €2,500,000 Fredo prepares financial statements using IFRS and elects to revalue the asset.

116.     In the second step of the 2-step revaluation process at December 31, 2011, the journal entry to revalue the equipment will include a

a.   debit to Depreciation Expense for €255,000.

b.   credit to Equipment for €50,000.

c.   credit to Accumulated Depreciation for €170,000.

d.   credit to Revaluation Surplus for €150,000.

117.     The 2012 (second year) income statement will report depreciation expense for the equipment of

a.   €178,571.

b.   €170,000.

c.   €166,667.

d.   cannot be determined from the information given.

Use the following information for questions 118-121.

Simpson Company applies revaluation accounting to plant assets with a carrying value of $800,000, a useful life of 4 years, and no salvage value. Depreciation is calculated on the straight-line basis. At the end of year 1, independent appraisers determine that the asset has a fair value of $750,000.

118.     The journal entry to record depreciation for year one will include a

a.   debit to Accumulated Depreciation for $200,000.

b.   debit to Depreciation Expense for $50,000.

c.   credit to Accumulated Depreciation for $50,000.

d.   debit to Depreciation Expense for $200,000.

     

119.     The journal entry to adjust the plant assets to fair value and record revaluation surplus in year one will include a

a.   debit to Accumulated Depreciation for $50,000.

b.   credit to Depreciation Expense for $150,000.

c.   credit to Plant Assets for $150,000.

d.   credit to Revaluation Surplus for $150,000.

120.     The financial statements for year one will include the following information

a.   Accumulated depreciation $200,000.

b.   Depreciation expense $50,000.

c.   Plant assets $750,000.

d.   Revaluation surplus $50,000.

121.     The entry to record depreciation for this same asset in year two will include a

a.   debit to Accumulated Depreciation for $200,000.

b.   debit to Depreciation Expense for $250,000.

c.   credit to Accumulated Depreciation for $150,000.

d.   debit to Depreciation Expense for $200,000.

122.     In 2010, MegaStores reported net income of $3.8 billion, net sales of $109.8 billion, and average total assets of $61.0 billion. What is MegaStores' asset turnover ratio?

a.   .0.56 times

b.   .0.06 times.

c.   1.80 times.

d.   16.05 times.

123.     In 2010, MegaStores reported net income of $3.8 billion, net sales of $109.8 billion, and average total assets of $61.0 billion. What is MegaStores' return on total assets?

a.   6.2%

b.   16.1%

c.   55.6%

d.   180%

Use the following information for questions 124 and 125:

For 2010, Hoyle Company reports beginning of the year total assets of $900,000, end of the year total assets of $1,100,000, net sales of $1,250,000, and net income of $250,000.

124.     Hoyle’s 2010 asset turnover ratio is

a.   .23 times.

b.   .25 times.

c.   1.14 times.

d.   1.25 times.

125.     The rate of return on assets for Hoyle in 2010 is

a.   20.0%.

b.   22.7%.

c.   25.0%.

d.   27.8%.

     

126.     Markowitz Company reported the following data:

                                                           2010                        2011

Sales                                 $2,000,000            $2,600,000

Net Income                            300,000                 400,000

Assets at year end              1,800,000              2,500,000

Liabilities at year end          1,100,000              1,500,000

What is Markowitz’s asset turnover for 2011?

a.   1.04

b.   1.07

c.   1.21

d.   1.44

127.     Froelich Company reported the following data:

                                                           2010                        2011

Sales                                 $2,000,000            $2,800,000

Net Income                            300,000                 400,000

Assets at year end              1,800,000              2,500,000

Liabilities at year end          1,100,000              1,500,000

What is Froelich’s asset turnover for 2011?

a.   1.12

b.   1.15

c.   1.30

d.   1.56

Multiple Choice Answers—Computational

Item	Ans.	Item	Ans.	Item	Ans.	Item	Ans.	Item	Ans.	Item	Ans.	Item	Ans.
63.	c	73.	b	83.	c	93.	b	103.	c	113.	b	123.	a
64.	c	74.	b	84.	a	94.	b	104.	c	114.	b	124.	d
65.	b	75.	b	85.	c	95.	a	105.	b	115.	a	125.	c
66.	c	76.	b	86.	d	96.	b	106.	b	116.	b	126.	c
67.	b	77.	c	87.	b	97.	a	107.	c	117.	a	127.	c
68.	c	78.	b	88.	a	98.	c	108.	c	118.	d
69.	b	79.	a	89.	d	99.	a	109.	b	119.	d
70.	c	80.	c	90.	c	100.	b	110.	d	120.	c
71.	b	81.	c	91.	d	101.	b	111.	b	121.	b
72.	c	82.	b	92.	c	102.	a	112.	a	122.	c

  63.          c          $100,000 – $10,000 = $90,000.

  64.          c          $200,000 – $20,000 = $180,000.

  65.          b          ($13,000 – 0) × .50 × 6/12 = $3,250.

  66.          c          ($13,000 – 0) × .50 × 6/12 = $3,250;

                             ($13,000 – $3,250) × .50 = $4,875.

  67.          b          ($75,000 – $3,000) ÷ 120,000 = $.60;

                             $.60 × 18,000 = $10,800.

  68.          c          ($75,000 – $3,000) ÷ 120,000 = $.60;

                             $.60 × 32,000 = $19,200.

  69.          b          [$200,000 – $10,000) ÷ 10,000] × 1,100 = $20,900.

  70.          c          $150,000 × [(1 ÷ 8) × 2] = $37,500

                             ($150,000 – $37,500) × [(1 ÷ 8) × 2] = $28,125.

  71.          b          [($600,000 – $30,000) ÷ 10,000] × 1,100 = $62,700.

  72.          c          $360,000 × [(1 ÷ 8) × 2] = $90,000

                             ($360,000 – $90,000) × [(1 ÷ 8) × 2] = $67,500.

  73.          b          [$150,000 – ($150,000 × 0.1)] × 0.2 = $27,000.

  74.          b          [$60,000 × (1 – 0.5)] × 0.5 = $15,000.

  75.          b          [$120,000 – ($120,000 × 0.2 × 0.75)] × 0.2 = $20,400.

  76.          b          [$69,000 – ($69,000 × 0.4)] × 0.4 = $16,560.

  77.          c          ($24,000 – $6,000) × 1/6 = $3,000.

  78.          b          $2,100,000 – [($2,100,000 – $75,000) × (9/45 + 8/45)] = $1,335,000.

  79.          a          ($50,000 – $5,000) × 1/36 = $1,250.

  80.          c          ($180,000 × 8/36 × 9/12) + ($180,000 × 7/36 × 3/12) = $38,750.

  81.          c          (AC – $30,000) × 6/36  = $65,000

                                                            AC = $420,000.

  82.          b          (AC – $15,000) × 7/55  = $70,000

                                                            AC = $565,000.

  83.          c          $40,000 – [($40,000 – $4,000) ÷ 9 × 5] = $20,000 (BV)

                             $22,000 – $20,000 = $2,000 (gain).

  84.          a          ($395,000 – $370,000) + [$125,000 – ($60,500 + $4,000)] = $85,500.

  85.          c          $310,000 – {$325,000 – [$98,000 – ($58,800 – $4,300)]} = $28,500.

  86.          d          (1/8 = .125 X 2 = .25); (.25 X £1,360,000 = £340,000);[.25 X(£1,360,000 - £340,000) = £255,000].

  87.          b          (€2,000,000 - €150,000)/ 400,000 = €4.625/ hour X 35,000 hours = €161,875.

  88.          a          1/28 X (CHF650,000 – CHF55,000) = CHF21,250.

  89.          d          [($250,000 – $25,000) ÷ 5] × 3 1/12 = $138,750.

  90.          c          $300,000 – [($300,000 – $30,000) × 3/9] = $210,000

                             ($210,000 – $50,000) ÷ (5 – 3) = $80,000.

  91.          d          [($300,000 – $30,000) ÷ 5] × 3 1/12 = $166,500.

  92.          c          $420,000 – [($420,000 – $42,000) x 3/9] = $294,000

                             ($294,000 – $70,000) ÷ (5 – 3) = $112,000.

  93.          b          [($90,000 – 0) ¸ 20] × 10 = $45,000

                             [($90,000 – $45,000) + $15,000] ÷ [(20 – 10)+5] = $4,000.

  94.          b          ($750,000 – $177,000) ÷ 5 = $114,600.

  95.          a          [($500,000 ÷ 10) × 7] – $125,000 = $225,000  new (AD)

                             $500,000 – $225,000 = $275,000; $275,000 ÷ 8 = $34,375 per year.

  96.          b          [($400,000 ¸ 10) × 6] – $96,000 = $144,000  new (AD)   

                             $440,000 – $144,000 = $296,000 (BV)

                             ($296,000 – $20,000) ÷ 8 = $34,500 per year.

  97.          a          $200,000 > $190,000; No loss recognized.

  98.          c          $170,000 < $190,000; $175,000 – $190,000 = ($15,000).

  99.          a          $815,000 > $800,000; No impairment.

100.          b          €3,060,000/12 = €255,000; €3,060,000 – €255,000 = €2,805,000; €2,805,000 - €2,600,000 = €205,000.

101.          b          €2,600,000/11 = $236,364.

102.          a          CV > recoverable amount so no impairment has occurred.

103.          c          HK$9,350,000/ 9 = HK$1,038,889; HK$9,350,000 – HK$1,038,889 = HK$8,311,111; HK$8,350,000 – HK$8,311,111 = HK$38,889.

104.          c          HK$9,350,000/ 9 = HK$1,038,889; HK$9,350,000 – HK$1,038,889 = HK$8,311,111; HK$8,915,000 – HK$8,311,111 = HK$603,889 but recovery is limited to carrying amount if impairment had never occurred: HK$8,352,000 – HK$8,311,111 = HK$40,889.

105.          b          €4,500,000/12 = €375,000; €4,500,000 – €375,000 = €4,125,000; €4,125,000 – €3,850,000 = €275,000.

106.          b          €3,850,000/11 = €350,000.

     

107.          c          ($9,000,000 + $1,800,000 – $1,200,000) ÷ 2,000,000 = $4.80.

108.          c          [($3,400,000 – $200,000 + $1,000,000) ÷ 2,000,000] × 400,000 = $840,000.

109.          b          [($1,500,000 – $200,000) ÷ 10,000,000] × 1,200,000 = $156,000.

110.          d          [($6,000,000 + $720,000 – $630,000 + $1,500,000) ÷ 1,500,000] × 450,000

                             = $2,277,000.

111.          b          Discovery value is generally not recognized.

112.          a          ($500,000 + $120,000 + $60,000 – $170,000) ÷ 5,000 = $102.

113.          b          $500,000 + $120,000 + $60,000 – $170,000) ÷ 5,000 = $102;

                             900 × $102 = $91,800 dr. to Inventory.

114.          b          €3,570,000 – €3,500,000 = €70,000.

115.          a          €3,500,000 ÷ 14 = €250,000.

116.          b          €2,550,000 – €2,500,000 = €50,000.

117.          a          €2,500,000/14 = €178,571.

118.          d          ($800,000 – 0) ÷ 4 = $200,000 Depr. Exp.

119.          d          $750,000 – ($800,000 – $200,000) = $150,000 Reval. Surplus

120.          c         

121.          b          $750,000 ÷ 3 = $250,000.

122.          c          $109.8 ÷ $61 = 1.8 times.

123.          a          $3.8 ÷ $61 = 6.2%

124.          d          $1,250,000 ÷ [($900,000 + $1,100,000) ÷ 2] = 1.25

125.          c          $250,000 ÷ [($900,000 + $1,100,000) ÷ 2] = 25%

126.          c          $2,600,000 ÷ [($1,800,000 + $2,500,000) ÷ 2] = 1.21

127.          c          $2,800,000 ÷ [($1,800,000 + $2,500,000) ÷ 2] = 1.30.