114. Martin Company purchases a machine at the beginning of the year at a cost of $76,000. The machine is depreciated using the straight-line method. The machine’s useful life is estimated to be 4 years with a $9,000 salvage value. Depreciation expense in year 4 is:
$67,000.
$19,000.
$16,750.
$76,000.
$0.
117. On January 1 of Year 1, Congo Express Airways issued $3,100,000 of 7% bonds that pay interest semiannually on December 31 and June 30. The bond issue price is $2,830,000 and the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized at a rate of $9,000 every six months. The amount of interest expense recognized by Congo Express Airways on the bond issue in Year 1 would be:
$117,500.
$217,000.
$199,000.
$235,000.
$248,000.
123. A company purchased equipment valued at $263,000. It traded in old equipment for a $164,000 trade-in allowance and the company paid $99,000 cash with the trade-in. The old equipment cost $250,000 and had accumulated depreciation of $100,000. This transaction has commercial substance. What is the recorded value of the new equipment?
$150,000.
$263,000.
$249,000.
$99,000.
114.
Depreciation under the Straight line method = (Cost - Salvage value) / Estimated useful life
= ($76,000 - $9,000) / 4
= $16,750
117.
Semiannual interest = ($3,100,000 * 3.5%) + $9,000
= $108,500 + $9,000
= $117,500
Interest in Year 1 = $117,500 * 2
= $235,000
123.
New equipment = Carrying value of the asset given up + Cash paid
= ($250,000 - $100,000) + $99,000
= $249,000
114. Martin Company purchases a machine at the beginning of the year at a cost of...