18). During prior periods, the Rocket Company used the double-declining balance method for depreciating its equipment, but in 2010 it decided to switch to the straight-line method. The equipment was purchased in 2008 for $1,000,000 and had a 10-year life. The balance in the accumulated depreciation account for equipment at the beginning of 2010 was $360,000. How will 2010's net income be changed by switching to the new depreciation if Rocket has an effective tax rate of 40 percent. O $ 60,000 smaller O $16,800 larger O $28,000 larger O $40,000 smaller

18). During prior periods, the Rocket Company used the double-declining balance method for depreciating its equipment, but in 2010 it decided to switch to the straight-line method. The equipment was purchased in 2008 for $1,000,000 and had a 10-year life. The balance in the accumulated depreciation account for equipment at the beginning of 2010 was $360,000. How will 2010's net income be changed by switching to the new depreciation if Rocket has an effective tax rate of 40 percent. O $ 60,000 smaller O $16,800 larger O $28,000 larger O $40,000 smaller

Name: 18) . During prior periods, the Rocket Company used the double-declin
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Description: 18) . During prior periods, the Rocket Company used the double-declining balance methodfordepreciating its equipment, but in 2010 it decided to switch to the straight-linemethod.The equipment was purchased in 2008 for $1,000,000 and had a 10-year li

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Mazaya Company purchased a piece of equipment on January 1, 2010. The equipment cost R.O.80,o00 and had an estimated life of 8 years and a residual value of R.O.10,000. What was the depreciation expense for the asset for 2010 under the double-declining-balance method?
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On Jan. 2, 2014, Sirap Co. bought a mounding machine for $400,000. The machine has an 8-year useful life with Zero residual value. The company used the Straight-Line Depreciation method. On Jan. 2, 2017, the company changed to the Double Declining Balance depreciation method. Compute depreciation expense that should be taken for 2017. Ignore all income tax considerations.
Navigation Inc. acquired an equipment on January 1, 2014 at a cost of $2,200,000 including an estimated residual value of $200,000 and twenty (20) years estimated useful life. The replacement cost of the equipment is $2,400,000 on December 30, 2017. The depreciated replacement cost declined to $1,470,000 after two years. If there is a need to gross up, round off percentage to whole number and to nearest dollar. Questions: 1. What is the carrying amount of the equipment on December 31, 2020?2. What is the balance of the revaluation surplus immediately after revaluation?
On January 1, 2007, Flax Co. purchased a machine for 528,000 and depreciated it by the straight-line method using an estimateduseful life of eight years with no salvage value. On January 1, 2010, Flax determined that the machine had a useful life of six years from the date of acquisition and will have a salvage value of 48,000. An accounting change was made in 2010 to reflect these additional data. The accumulated depreciation for this machine should have a balance at December 31, 2010 ofa.292,000b.308,000c.320,000d.352,000
Irwin, Inc., constructed a machine at a total cost of $35 million. Construction was completed at the end of 2014and the machine was placed in service at the beginning of 2015. The machine was being depreciated over a10-year life using the sum-of-the-years’-digits method. The residual value is expected to be $2 million. At thebeginning of 2018, Irwin decided to change to the straight-line method. Ignoring income taxes, what journalentry(s) should Irwin record relating to the machine for 2018?
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Luna Springs Inc. exchanged an old vehicle for a new vehicle on August 31, 2014. The original cost of Luna Springs Inc.'s old vehicle was $45,000 on January 1, 2010. Depreciation was calculated using the straight line method over a ten-year useful life, with an estimated residual value of $3,000. The fair value of the old vehicle on August 31, 2014 was $21,500. The list price of the new vehicle was $30,000. Luna Springs Inc. paid $2,000 in cash as part of the exchange. The new vehicle should be recorded on Luna Springs Inc.'s books at: $25400, $23500, $30000, or none of the above
Mazaya Company has decided to sell one of its old machines on June 30, 2011. The machine was purchased for R.O:120,000 on January1,2007, and was depreciated on a straight-line basis for 10 years with no residual value. If the machine was sold for R.O 33,000, what was the amount of the gain or loss recorded at the time of the sale? Select one. O a RO 69,00. b RO 27.000. O CRO33,000. d RO 81,000.
Rogers Co. had a sheet metal cutter that cost $240,000 on January 1, 2013. This old cutter had an estimated life of ten years and a salvage value of $40,000. On April 1, 2018, the old cutter is exchanged for a new cutter with a fair value of $120,000. Rogers also received $30,000 cash. Assume that the last fiscal period ended on December 31, 2017, and that straight-line depreciation is used. Instruction: Record any entries required on April 1, 2018.