46 A fixed asset with a cost of 35071 and accumulated deprec

46. A fixed asset with a cost of $35,071 and accumulated depreciation of $31,564 is traded for a similar asset priced at $61,265 (fair market value) in a transaction with commercial substance. Assuming a trade-in allowance of $4,845, the cost basis of the new asset is

Select the correct answer.

$64,772

$59,927

$61,265

$56,420

50. A fixed asset with a cost of $53,121.00 and accumulated depreciation of $45,152.85 is traded for a similar asset priced at $79,146.00. Assuming a trade-in allowance of $4,272.00, the recognized loss on the trade is___ Select the correct answer.

$33,993.15

$7,968.15

$4,272.00

$3,696.15

56. Computer equipment was acquired at the beginning of the year at a cost of $57,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years. Determine the second-year depreciation using the straight-line method.

$13,200

$9,000

$19,200

$9,600

57. A used machine with a purchase price of $33,139.00, requiring an overhaul costing $9,390.00, installation costs of $5,799.00, and special acquisition fees of $25,577.00, would have a cost basis of____ Select the correct answer.

$42,529.00

$33,139.00

$114,671.00

$73,905.00

73. If a fixed asset, such as a computer, were purchased on January 1st for $2,436.00 with an estimated life of 3 years and a salvage or residual value of $235.00, what is the journal entry for monthly expense under straight-line depreciation?Select the correct answer.

If a fixed asset, such as a computer, were purchased on January 1st for $2,436.00 with an estimated life of 3 years and a salvage or residual value of $235.00, what is the journal entry for monthly expense under straight-line Select the correct answer Accumulated Depreciation 733.67 Depreciation Expense $733.67 $61.14 $61.14 $733.67 O Depreciation Expense $61.14 Accumulated Depreciation Accumulated Depreciation $61.14 Depreciation Expense Depreciation Expense $733.67 Accumulated Depreciation

Solution

46 Exchanges of old assets with new assets that have commercial substance (future cash flows are expected to change) should be accounted for at fair value $61,265 50 $ Cost of old asset         53,121.00 Less: Accumulated depreciation       (45,152.85) Book value of asset           7,968.15 Less: trade in allowance          (4,272.00) Loss           3,696.15 56 Cost of asset 57,000 Less: estimated residual value -9000 Value of asset to be depreciated 48,000 Annual depreciation under stright-line method = $ 48,000 / 5 years = $ 9,600 Uder stright-line method, in every year depreciation shall be same amount. Secon-year depreciation = $ 9,600 73 Cost of asset 2,436 Less: estimated residual value -235 Value of asset to be depreciated 2,201 Annual depreciation under stright-line method = $ 2,201 / 3 years = $ 733.67 Monthly depreciation = $ 733.67 x 1/12 = $ 61.14 Journal entry Date Account\'s tittle Debit $ Credit $ Depreciation expenses 61.14 Accumulated depreciation 61.14