Reference no: EM132704335

Problem 1: A machine costing $25,000 with a 5-year life and $5,000 residual value was purchased January 2. Compute depreciation for the first year using the declining-balance method at twice the straight-line rate (double-declining balance).

Option 1: $10,000

Option 2: $9,000

Option 3: $20,000

Option 4: $18,000

Problem 2: Falcon Company purchased land to construct a new warehouse, paying $30,000 and giving a long-term note for $370,000. Legal fees paid were $11,000, delinquent taxes assumed were $17,000, and fees paid to remove an old building from the land were $16,500. Materials salvaged from the demolition of the building were sold for $4,500. A contractor was paid $1,000,000 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet .

Option 1: $437,000

Option 2: $440,000

Option 3: $446,000

Option 4: $442,000

Problem 3: Computer equipment was acquired at the beginning of the year at a cost of $56,000. It has an estimated residual value of $6,000 and an estimated useful life of 4 years. Determine the 2nd year's depreciation expense using straight-line depreciation.

Option 1: $10,600

Option 2: $11,200

Option 3: $10,000

Option 4: $12,500

Problem 4: A possible future obligation that will become a liability only if certain events occur in the future is

Option 1: a contingent liability

Option 2: a discounted liability

Option 3: an accrued liability

Option 4: a deferred liability