Reference no: EM132518509

Problem 1: On January 1, 2016, the company purchased equipment for $ 22,000. The company uses the straight-line method over its 4-year useful life. Assuming that the residual value of the asset is $ 2,000, what will be the accumulated depreciation for this equipment on December 31, 2019?

a. 20,000 $

b. 5,000 $

c. 10,000 $

d. 15,000 $

Problem 2: On the 1st January 2017, Al Rayan Company purchased machines for 220,000 riyals. Their estimated useful life is 4 years and their residual value is 20,000 riyals. The total estimated production units of these machines during their useful life is 500,000 units. The actual units produced are 180,000 units in the first year, 150,000 units in the second year, 130,000 units in the third year and 80,000 units in the fourth year. The depreciation expense for the second year will be:

a. 66,000 QR

b. 60,000 QR

c. 132,000 QR

d. 88,000 QR

Problem 3: The Jewels Company purchased equipment on the 2nd January 2015 for $ 50,000. The estimated residual value is $ 2,000 with estimated useful life of 4 years or total production of 160,000 units. The equipment produced 23,000 units in 2015 and 31,000 units in 2016. The company's fiscal year ends on December 31 of each year. If the company uses units of production method, the depreciation expense at the end of 2016 is:

a. 6,900 $

b. 9,300 $

c. 12,000 $

d. 16,200 $

Problem 4: Land improvements such as afforestation cannot be added to the cost of land and are recorded in a separate account from the land account

True

False

Problem 5: Land improvements are assets that add value to land, but have a limited useful life so they are subject to depreciation

True

False