Reference no: EM132627150

Questions -

Q1. Finx, Inc., purchased a truck for $35,000. The truck is expected to be driven 15,000 miles per year over a five-year period and then sold for approximately $5,000. Determine depreciation for the first year of the truck's useful life by the straight-line.

Q2. Alexander Company purchased a piece of equipment for $12,000 and depreciated it for three years over a five-year estimated life with an expected residual value at the end of five years of $2,000. At the end of the third year, Alex decided to upgrade to equipment with increased capacity and sold the original piece of equipment for $7,200. Calculate the gain or loss on the disposal at the end of the third year.

Q3. Tullahoma Company purchased equipment for $27,500. It depreciated the equipment over a five year life by the double-declining-balance method until the end of the second year, at which time the asset was sold for $8,500. Calculate the gain or loss on the sale at the end of the second year.

Q4. On January 2, 2011, Jansing Corporation acquired a new machine with an estimated useful life of five years. The cost of the equipment was $40,000 with a residual value of $5,000.

1. Prepare a complete depreciation table under the two depreciation methods listed below.

1. Straight-line.

2. 200 percent declining-balance.

3. 150 percent declining-balance with a switch to straight-line when it will maximize depreciation expense.