Question

QUESTION 13 An asset with a life of 7 years was purchased 4 years ago at a cost of $10,000. It now has a book value of $5,200 based on straight-line depreciation. The asset's expected salvage value is closest to: a. $1,600 b. $1,200 c. $2,000 d. $1,000 QUESTION 14 The sum-of-the-year's-digits (SOYD) method of depreciation is: a the method of depreciation that gives the same annual depreciation expense during an asset's useful life. the method of depreciation that gives the lowest annual depreciation in the early years of an ib asset's useful life. c. an accelerated method of depreciation in the early years of an asset's useful life. the method of depreciation that gives an annual depreciation expense that is based on the d. amount of use given to the asset during the year. the method of depreciation that disregards salvage value when calculating annual depreciation expense. QUESTION 15 1. The Cougar Computers & Accessories Store (CCAS) has the following inventory data for a particular item it carries: August 1 Inventory: 30 units @ $6.00 each August & Purchase: 120 units @ $6.45 each August 17 Purchase: 60 units @ $6.30 each August 25 Purchase: 90 units @ $6.60 each A physical count of item inventory on August 31 reveals that there are 100 units on hand. The ending item inventory value under the LIFO periodic inventory system is closest to: . a. $657 b. $632 c. $1,295 d. $1,269

Answer 1

13) Annual Depreciation = 4800/4 = 1200 per year

Depreciation expense = (Cost-Salvage value)/Useful life

1200 = (10000-X)/7

8400 = 10000-X

X(Salvage value) = 1600

So answer is a) $1600

14) Sum of year digit method does not give same amount of Depreciation and lowest amount in early years. Under sum of year digit method we use salvage value also

So answer is c) the accelerated method of depreciation in early years of an assets's useful life

15) Ending inventory = (30*6+70*6.45) = 632

So answer is b) $632