A2 Chapter 7: Accounting for Plant Assets

JH Enterprise purchased a machine for $13,500. The machine has an estimated useful life of 5,000 hours and no estimated salvage value. JH Enterprise uses the production-units method of depreciation. In the first year of use, the machine was used for 600 hours. What is the depreciation for the first year?

• $1,350

• $1,620

• $2,000

• $2,700

Ford Motor Company purchased a brake machine for $100,000. The machine has an estimated useful life of 50,000 brakes and no estimated salvage value. Ford Motor Company uses the production-units method of depreciation. In the first year of use, the brake machine produced 4,000 brakes. What is the depreciation for the first year?

• $2,000

• $4,000

• $8,000

• $20,000

Jarvis Sofas purchased an upholstery machine for $30,000. The upholstery machine has an estimated useful life of 5,000 sofas and no estimated salvage value. Jarvis Sofas uses the production-units method of depreciation. In the first year of use, the upholstery machine produced 1,200 sofas. What is the depreciation for the first year?

• $1,200

• $3,000

• $5,000

• $7,200

On January 1, Taxi Service, Inc., purchased a new taxi for $18,000. The taxi has an estimated useful life of five years and an estimated salvage value of $3,000. Taxi Service, Inc., uses the sum-of-the-years'-digits method of depreciation. What is the depreciation expense for the second year?

• $3,000

• $3,600

• $4,000

• $5,000

Brandon's Sports Grille sold an old oven for $500. The original cost of the oven was $2,000. The oven had no salvage value and had accumulated depreciation of $1,000. The entry to record this transaction is:

• debit Cash, $500, Accumulated Depreciation, $1,000; credit Kitchen Equipment, $1,500.

• debit Accumulated Depreciation, $1,000, Gain on Sale of Asset, $1,000; credit Kitchen Equipment, $2,000.

• debit Kitchen Equipment, $2,000; credit Accumulated Depreciation, $1,000, Gain on Sale of Asset, $1,000.

• debit Cash, $500, Accumulated Depreciation, $1,000, Loss on Sale of Asset, $500; credit Kitchen Equipment, $2,000.

Carson's Skate Shop discarded a display case that originally cost $2,000. The display case had no salvage value and was fully depreciated. The entry to record this transaction is:

• debit Display Equipment, $2,000; credit Depreciation Expense, $2,000.

• debit Display Equipment, $2,000; credit Accumulated Depreciation, $2,000.

• debit Accumulated Depreciation, $2,000; credit Display Equipment, $2,000.

• debit Accumulated Depreciation, $2,000; credit Depreciation Expense, $2,000.

Tucker's Café discarded a dishwasher that originally cost $8,000. The dishwasher had no salvage value and was fully depreciated. The entry to record this transaction is:

• debit Accumulated Depreciation, $8,000; credit Depreciation Expense, $8,000.

• debit Accumulated Depreciation, $8,000; credit Kitchen Equipment, $8,000.

• debit Kitchen Equipment, $8,000; credit Accumulated Depreciation, $8,000.

• debit Kitchen Equipment, $8,000; credit Depreciation Expense, $8,000.

Wilson Sporting Goods purchased a machine for $75,000. The machine has an estimated useful life of 50,000 hours and no estimated salvage value. Wilson Sporting Goods uses the production-units method of depreciation. In the first year of use, the machine operated 15,000 hours. What is the depreciation for the first year? 

• $10,000 
• $22,500 
• $25,000 
• $50,000 

Kaylee's Kinder Care sold an activity van for $6,000. The original cost of the van was $25,000. The van had no salvage value and had accumulated depreciation of $18,000. The entry to record this transaction is:

• debit Cash, $6,000, Accumulated Depreciation, $18,000, Loss on Sale of Asset, $1,000; credit Vehicles, $25,000.

• debit Accumulated Depreciation, $18,000, Gain on Sale of Asset, $7,000; credit Vehicles, $25,000.

• debit Vehicles, $25,000; credit Accumulated Depreciation, $18,000, Gain on Sale of Asset, $7,000.

• debit Cash, $6,000, Accumulated Depreciation, $18,000; credit Vehicles, $24,000.

Cooper Fitness Center discarded a treadmill that originally cost $2,000. The treadmill had no salvage value and accumulated depreciation was $1,500. The entry to record this transaction is: 

• debit Accumulated Depreciation, $1,500, Loss on Disposal of Assets, $500; credit Fitness Equipment, $2,000. 
• debit Accumulated Depreciation, $1,500; credit Fitness Equipment, $2,000, Loss on Disposal of Assets, $500. 
• debit Accumulated Depreciation, $2,000; credit Depreciation Expense, $1,500, Fitness Equipment, $500.