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Depreciation Exercise 45, 600 Indicate the best answer for cach question in the space 400 Use the following data for questions 1 and 2 34 On March 12, 2008, Shorcham, Inc. acquired melting equipment for $45,600. The estimated life of the equipment is 6 years, with an estimated residual value of $2,400 1 Refer to above data In its financial statements, Shoreham uses straight-line depreciation with the half- year convention. The book value of the cquipment at December 31, 2009, will be: a S26,600 b $42,000 $34,800 $34,800 d Some other amount. 2 Refer to above data. In its financial statements, Shorcham uses double-declining-balance depreciation with half-year convention. The book value of the equipment at December 31, 2009, will be: AS't27e20.267. b $12,667. (OS25333. d Some other amount. 3 Sayville Dairy sold a delivery truck for cash of S8,680. The original cost of the truck was S33,600, and a loss of S3,320 was recognized on the sale. The accumulated depreciation at the date of sale must have been a $24,920, bS14,560. $3.360. s19600 Cage Corporation purchases Presley Company's entire business for $2,700,000. The fair market value of Presley's net identifiable acts is $2,400,000. 4 27"n- help l o Presley should record goodwill of $300,000 Presley Cage paid $300,000 for goodwill generated by Presley c Cage should charge the $300,000 excess paid for Presley Company directly to expense d Presley should record amortization over a period not to exceed 40 ycars Throughout the current year, Calverton Company treated sales taxes paid on purchases of plant asscts as revenue expenditures. As a result, the current year's: 5 a Nct income is overstated Revenue is overstated. c Depreciation expense is understated None of the above; payments of sales taxes should be treated as revenue expenditures. b d 8680 A

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