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Mather Company purchased equipment 



1.	Sargent Corporation bought equipment on January 1, 2011. The equipment cost €180,000 and had an expected residual value of €30,000. The life of the equipment was estimated to be 6 years. The depreciation expense using the straight-line method of depreciation is

2.	Sargent Corporation bought equipment on January 1, 2011. The equipment cost €180,000 and had an expected residual value of €30,000. The life of the equipment was estimated to be 6 years. The book value of the equipment at the beginning of the third year would be

3.	Tomko Company purchased machinery with a list price of $32,000. They were given a 10% discount by the manufacturer. They paid $200 for shipping and sales tax of $1,500. Tomko estimates that the machinery will have a useful life of 10 years and a residual value of $10,000. If Tomko uses straight-line depreciation, annual depreciation will be

4.	Drago Company purchased equipment on January 1, 2010, at a total invoice cost of $400,000. The equipment has an estimated residual value of $10,000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at December 31, 2011, if the straight-line method of depreciation is used?
5.	On January 1, a machine with a useful life of five years and a residual value of $25,000 was purchased for $75,000. What is the depreciation expense for year 2 under the double-declining-balance method of depreciation?

6.	A machine with a cost of $160,000 has an estimated residual value of $10,000 and an estimated useful life of 5 years or 15,000 hours. It is to be depreciated using the units-of-activity method of depreciation. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

7.	Equipment with a cost of ¥320,000 has an estimated residual value of ¥20,000 and an estimated life of 4 years or 15,000 hours. It is to be depreciated using the units-of-activity method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours?

8.	Eckman Company purchased equipment for $40,000 on January 1, 2010, and will use the double-declining-balance method of depreciation. It is estimated that the equipment will have a 5-year life and a $2,000 residual value at the end of its useful life. The amount of depreciation expense recognized in the year 2012 will be

9.	Grimwood Trucking purchased a tractor trailer for $147,000. Grimwood uses the units-of-activity method for depreciating its trucks and expects to drive the truck 1,000,000 miles over its 12-year useful life. Residual value is estimated to be $21,000. If the truck is driven 90,000 miles in its first year, how much depreciation expense should Grimwood record?
a.	$10,500
b.	$13,230
c.	$11,340
10.	On May 1, 2011, Pinkley Company sells office furniture for €90,000 cash. The office furniture originally cost €225,000 when purchased on January 1, 2003. Depreciation is recorded by the straight-line method over 10 years with a residual value of €22,500. What depreciation expense should be recorded on this asset in 2011?
a.	€6,750.
b.	€7,500.
c.	€10,125.
d.	€20,250.


	11.	On May 1, 2011, Pinkley Company sells office furniture for €90,000 cash. The office furniture originally cost €225,000 when purchased on January 1, 2004. Depreciation is recorded by the straight-line method over 10 years with a residual value of €22,500. What gain should be recognized on the sale?

	12.	Mather Company purchased equipment on January 1, 2010 at a total invoice cost of $224,000; additional costs of $4,000 for freight and $20,000 for installation were incurred. The equipment has an estimated residual value of $8,000 and an estimated useful life of five years. The amount of accumulated depreciation at December 31, 2011 if the straight-line method of depreciation is used is:

	13.	Kingston Company purchased a piece of equipment on January 1, 2010. The equipment cost $80,000 and had an estimated life of 8 years and a residual value of $10,000. What was the depreciation expense for the asset for 2011 under the double-declining-balance method?

14.	Regarding depreciation,

15.	On January 1, 2011, Chicago Furniture purchased a new delivery truck. The truck is expected to be driven a total of 130,000 miles during its useful life of 4 years; however, Chicago Furniture expects that 2012 and 2013 will be the years the truck is most frequently used for deliveries. If Chicago Furniture wants to achieve the best matching of expenses with revenues, which IFRS acceptable deprecation method should it select?

16.	On January 1, 2011, Chicago Furniture purchased a new delivery truck. The company paid $65,000 for the truck, $12,000 for an annual insurance policy and $1,300 for a motor vehicle license. The truck has an estimated residual value of $5,000 at the end of its useful life and Chicago Furniture uses the double-declining-balance method for other similar assets. At what net amount will Chicago Furniture record the truck on its statement of financial position at December 31, 2011?

17.	As a recent graduate of State University you're aware that IFRS requires component depreciation for plant assets. A friend has asked you to succinctly explain what component depreciation means. Which of the following correctly describes component depreciation?

 18.	Salem Company hired Kirk Construction to construct an office building for ₤8,000,000 on land costing ₤2,000,000, which Salem Company owned. The building was complete and ready to be used on January 1, 2011 and it has a useful life of 40 years. The price of the building included land improvements costing ₤600,000 and personal property costing ₤750,000. The useful lives of the land improvements and the personal property are 10 years and 5 years, respectively. Salem Company uses component depreciation, and the company uses straight-line depreciation for other similar assets. What total amount of depreciation expense would Salem Company report on its income statement for the year ended December 31, 2011?


19.	Salem Company hired Kirk Construction to construct an office building for ₤8,000,000 on land costing ₤2,000,000, which Salem Company owned. The building was complete and ready to be used on January 1, 2011 and it has a useful life of 40 years. The price of the building included land improvements costing ₤600,000 and personal property costing ₤750,000. The useful lives of the land improvements and the personal property are 10 years and 5 years, respectively. Salem Company uses component depreciation, and the company uses straight-line depreciation for other similar assets. What is the net amount reported for the building on Salem Company's December 31, 2011 statement of financial position?

20.	IFRS allows companies to revalue plant assets to fair value. Which of the following statements is true regarding revaluation?






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