Reference no: EM132946652
Questions -
Question 1 - ABC Company purchased a computer on January 1, 2013, for $4,000. It is depreciated over 5 years using a straight-line method, with the salvage value of $500. On January 1, 2015, the remaining life of the computer is revised to 1 year with the zero salvage value due to the rapid technology development. What is the depreciation expense for 2015?
$1,000
$2,000
$2,500
None of the above
Question 2 - A machine costs $100,000 and has an estimated useful life of 5 years and a residual value of $10,000. If it is purchased on July 1, 2013, and the applicable tax rate is 35%, the 2015 depreciation tax shield for the straight-line depreciation is:
$6,300
$8,400
$7,350
$9,450
Question 3 - In terms of Question 2, what would the amount of depreciation for 2015 be, if the sum of years' digits method is used?
$21,000
$27,000
$18,000
$24,000
Question 4 - On July 1, 2010, Cynthia Corporation issued bonds with the face value of $400,000 carrying a 6% coupon. The bonds were issued at an 8% yield to maturity. Coupon payment dates are June 30 and December 31, the maturity date - June 30, 2020. The bond discount amortization for 6 months ending June 30, 2015 under the effective interest method will be:
$2,598
$2,702
$2,498
$2,810
Question 5 - In terms of Question 4, the total balance of the Discount on Bonds account as of December 31, 2013 will be:
$19,027
$39,943
$14,419
$35,335
Question 6 - In terms of Question 5 suppose that the straight-line amortization of the bond discount is used. Then the interest expense for 6 months ending June 30, 2017 will amount to:
$10,641
$12,000
$14,718
$13,826
Question 7 - The market price of the stock of WP Corporation is $66. If WP declares a 100% stock dividend, the market price will probably adjust to:
$66
$50
$132
$33
Question 8 - The equipment costs $48,000, has no salvage value, and is depreciated over 4 years. Straight-line depreciation is used for income reporting, and the sum-of-years' digits depreciation method - for tax purposes. The tax rate is 40%. The deferred income tax account at the end of year 2 will show:
A credit balance of $3,840
A credit balance of $2,880
A debit balance of $3,840
A debit balance of $2,880