Reference no: EM133585510

Question 1. What are the major characteristics of PPE?

Question 2. Why depreciation of property, plant and equipment is computed systematically and recorded as expense.

Question 3. Indicate which of the following costs should be expensed when incurred.

a) 13,000 paid to rearrange and reorganize machinery.
b) 200,000 Said for addition to building.
c) 200 Said for tune-up and oil change on a delivery truck.
d) 7,000 paid to replace a wooden floor with a concrete floor.
e) 2,000 Said for a major overhaul on a truck.

Question 4. LALA Ltd. Purchases equipment on January 1, year 1, at a cost of Birr 1,000,000. The asset is expected to have a service life of 4 years and a residual value of Birr 200,000.
Required: Compute the amount of depreciation using
a. Straight line methods
b. Sum of the years digit method
c. Double declining method
d. Pass journal entry to record in all the above methods

Question 5. Wenner Furnace Corp. purchased machinery for 29,000 on January 1, 2022. It is estimated that it will have a useful life of 10 years, residual value of 15,000, production of 20,000 units, and working hours of 25,000. During 2023, Wenner Corp. uses the machinery for 2,650 hours, and the machinery produces 25,500 units.

Required:
From the information given, compute the depreciation charge for 2023 under each of the following methods. (Round to the nearest dollar.)
a. Straight-line.
b. Units-of-output.
c. Working hours.
d. Sum-of-the-years'-digits.
e. Double-declining-balance.

Question 6. Assume that AYZ Company has the following data regarding to its equipment; original cost of the asset is Birr 100,000, Accumulated depreciation of the asset is Birr 80,000. Required:
Record the following disposal events
a) If the company discard the equipment.
b) If the company sold out the equipment for birr 23,000
c) If the company sold out the equipment for birr 20,000
d) If the company sold out the equipment for birr 18,000

Question 7. Assume that AYZ Company has the following data regarding to its equipment; original cost of the asset is Birr 100,000, Accumulated depreciation of the asset is Birr 80,000.
Required: record the following exchanges
a. If the company exchanged the asset with a dissimilar asset with F.V of birr 25,000
b. If the company exchanged the asset with a dissimilar asset with F.V of birr 15,000
c. If the company exchanged the asset with a similar asset with F.V of birr 15,00
d. If the company exchanged the asset with a similar asset with F.V of birr 30,00, assume that the exchange has commercial substance
e. If the company exchanged the asset with a similar asset with F.V of birr 15,00 assume that the exchange hasn't commercial substance

Question 8. Henrik Mining purchased land on February 1, 2022, at a cost of 1,250,000. It estimated that a total of 60,000 tons of mineral was available for mining. It believes it will be able to sell the property afterwards for 100,000. It incurred developmental costs of 200,000 before it was able to do any mining. In 2022, resources removed totaled 2000 tons. Instructions: Compute the following information for 2022.
a. Per unit mineral cost.
b. depletion expense of 2022.
c. record depletion expense of the 2022