SmithCompanyfailedtorecorddepreciationofequipment.HowdoesthisomissionaffectSmith’sfinancialstatements?
A. Netincomeisoverstatedandassetsareoverstated.
B. Netincomeisunderstatedandassetsareunderstated.
C. Netincomeisoverstatedandassetsareunderstated.
D. Netincomeisunderstatedandassetsareoverstated.
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HunterCompanyusesthedouble-declining-balancemethodtomeasuredepreciationonitscomputers.Whichitemisnotneededtocomputedepreciationforthefirstyear?
A. Originalcost
B. Estimatedsalvagevalue
C. Expectedusefullifeinyears
DDBrate
Whichofthefollowingaccountsisreportedontheincomestatement?
A. Unearnedrevenue
B. Accumulateddepreciation
C. Gainondisposalofequipmenr
D. Allowanceforuncollectibleaccounts
RichardsCompanypurchasedamachinefor$8,800onJanuary1,2016.Themachinehasbeendepreciatedusingthestraight-linemethodoveran8yearlifeand$800salvagevalue.RichardssoldthemachineonJanuary1,2018,for$7,500.Basedonthesefacts,whatgainorlossshouldRichardsCompanyrecordonthesale?
A. Gain,$700
B. Loss,$900
C. Loss,$1,300
D. Gain,$1,500
Atthebeginningoflastyear,BettyCorporationpurchasedapieceofheavyequipmentfor$34,000.Theequipmenthasalifeof100,000hours.Theestimatedresidualvalueis$4,000.Bettyusedtheequipmentfor22,000hourslastyearand25,000hoursthisyear.Depreciationexpenseforyear2usingunits-of-productionwouldbe:
A. $8,500
B. $8,000
C. $7,500
D. $7,000