Name: _______________________________

Acct 304.903

2/6/13

Chapter 11 Quiz Version 1

1. A machine which cost $300,000 is acquired on October 1, 2012. Its estimated salvage value is $30,000 and
its expected life is 8 years. It has an estimated total output of 100,000 units. Calculate depreciation expense
for 2012 and 2013 by each of the following methods (show your work and place your answers in the boxes
below).
a. Sum-of-the-years digits method:
SYD: 8*9/2 = 36
2012: ($300,000 - $30,000) * 8/36 = $60,000 * 3/12 = $15,000
2013: ($300,000 - $30,000) * 7.75/36 = $58,125
2012 Depreciation Expense =

$15,000

2013 Depreciation Expense =

$58,125

b. Activity method, assuming actual activity for 2012 was 15,000 units and actual activity for 2013 was
22,000 units:
($300,000 - $30,000)/100,000 units = $2.70 per unit
2012: $2.70 * 15,000 = $40,500
2013: $2.70 * 22,000 = $59,400
2012 Depreciation Expense =

$40,500

2013 Depreciation Expense =

$59,400
2. Williamson Corporation purchased a depreciable asset for $400,000 on January 1, 2010. The estimated
salvage value is $40,000, and the estimated useful life is 10 years. The straight-line method is used for
depreciation. In 2013, Williamson changed its estimates to a total useful life of 15 years with a salvage
value of $10,000. What is 2013 depreciation expense?
Original Depreciation: ($400,000 - $40,000) / 10 = $36,000 depreciation expense per year
$36,000 * 3 years = $108,000 Accumulated Depreciation as of 12/31/12
Cost:
$400,000
<Accumulated Depreciation>:
<$108,000>
Book Value before change
$292,000
Depreciation Revision: ($292,000 - $10,000)/(15-3) = $23,500
2013 Depreciation Expense =
$23,500

Name: _______________________________
1.

Acct 304.903

2/6/13

(3.5 points) O-Corporation, which has a calendar year accounting period, purchased a new machine for
$60,000 on April 1, 2010. At that time Orton expected to use the machine for four years and then
dispose of it for $2,000. The machine was sold for $20,000 on Sept. 30, 2013. Assuming doubledeclining balance depreciation, calculate the gain or loss on the sale and show the appropriate journal
entry to recognize the sale.
Beginning of
the Year Book
Value

2010
2011
2012
2013

($60,000 Accumulated
Depreciation)
$60,000
$37,500
$18,750
$9,375

Cost:
<Accumulated Depreciation>:
Book Value before change
Sales Price :
Gain on Sale:

Partial
Depreciation Accumulated
Rate Year
Expense
Depreciation
2/4
9/12
$22,500
$22,500
2/4
$18,750
$41,250
2/4
$9,375
$50,625
2/4
9/12
$3,516
$54,141

$60,000
<$54,141>
$5,859
$20,000
$14,141

Journal Entry to Recognize the Sale:

Debits:

Dr. Cash
Dr. Accumulated Depreciation

$20,000
$54,141

Credits:

Cr. Machine
Cr. Gain on Sale

$60,000
$14,141

Name: _______________________________

Acct 304.903

2/6/13

Chapter 11 Quiz Version 2

1. A machine which cost $300,000 is acquired on October 1, 2012. Its estimated salvage value is $30,000
and its expected life is 8 years. It has an estimated total output of 100,000 units. Calculate depreciation
expense for 2012 and 2013 by each of the following methods (show your work and place your answers
in the boxes below).
a. Sum-of-the-years digits method:
SYD: 8*9/2 = 36
2012: ($300,000 - $30,000) * 8/36 = $60,000 * 3/12 = $15,000
2013: ($300,000 - $30,000) * 7.75/36 = $58,125
2012 Depreciation Expense =

$15,000

2013 Depreciation Expense =

$58,125

b. Activity method, assuming actual activity for 2012 was 12,000 units and actual activity for 2013 was
20,000 units:
($300,000 - $30,000)/100,000 units = $2.70 per unit
2012: $2.70 * 12,000 = $32,400
2013: $2.70 * 20,000 = $54,000
2012 Depreciation Expense =

$32,400

2013 Depreciation Expense =

$54,000

2.

(3 points) Williamson Corporation purchased a depreciable asset for $400,000 on January 1, 2010. The
estimated salvage value is $40,000, and the estimated useful life is 10 years. The straight-line method is
used for depreciation. In 2013, Williamson changed its estimate to a total useful life of 9 years with a
salvage value of $60,000. What is 2013 depreciation expense?
Original Depreciation: ($400,000 - $40,000) / 10 = $36,000 depreciation expense per year
$36,000 * 3 years = $108,000 Accumulated Depreciation as of 12/31/12
Cost:
$400,000
<Accumulated Depreciation>:
<$108,000>
Book Value before change
$292,000
Depreciation Revision: ($292,000 - $60,000)/(9-3) = $38,667
2013 Depreciation Expense =
$38,667
3

Name: _______________________________

Acct 304.903

2/6/13

3. (3.5 points) O-Corporation, which has a calendar year accounting period, purchased a new machine for
$60,000 on April 1, 2010. At that time Orton expected to use the machine for five years and then dispose
of it for $5,000. The machine was sold for $33,000 on Sept. 30, 2013. Assuming double-declining
balance depreciation, calculate the gain or loss on the sale and show the appropriate journal entry to
recognize the sale.

Beginning of
the Year Book
Value

2010
2011
2012
2013

($60,000 Accumulated
Depreciation)
$60,000
$42,000
$25,200
$15,120

Cost:
<Accumulated Depreciation>:
Book Value before change
Sales Price :
Gain on Sale:

Partial
Depreciation Accumulated
Rate Year
Expense
Depreciation
2/5
9/12
$18,000
$18,000
2/5
$16,800
$34,800
2/5
$10,080
$44,880
2/5
9/12
$4,536
$49,416

$60,000
<$49,416>
$10,584
$33,000
$22,416

Journal Entry to Recognize the Sale:

Debits:

Dr. Cash
Dr. Accumulated Depreciation

$33,000
$49,416

Credits:

Cr. Machine
Cr. Gain on Sale

$60,000
$22,416