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http://questionssolved.com/acc-422-week-5-final-exam/ Question 16 Depreciation is normally computed on the basis of the nearest Question 17 Fernandez Corporation purchased a truck at the beginning of 2012 for $58,380. The truck is estimated to have a salvage value of $2,780 and a useful life of 222,400 miles. It was driven 31,970 miles in 2012 and 43,090 miles in 2013. Compute depreciation expense for 2012 and 2013. Question 18 Lock hard Company purchased machinery on January 1, 2012, for $75,600. The machinery is estimated to have a salvage value of $7,560 after a useful life of 8 years. Question 19 Jurassic Company owns machinery that cost $1,270,800 and has accumulated depreciation of $508,320. The expected future net cash flows from the use of the asset are expected to be $706,000. The fair value of the equipment is $564,800. Prepare the journal entry, if any, to record the impairment loss. Question 20 Everly Corporation acquires a coal mine at a cost of $515,200. Intangible development costs total $128,800. After extraction has occurred, Everly must restore the property (estimated fair value of the obligation is $103,040), after which it can be sold for $206,080. Everly estimates that 5,152 tons of coal can be extracted. If 902 tons are extracted the first year, prepare the journal entry to record depletion. Question 21 Francis Corporation purchased an asset at a cost of $68,400 on March 1, 2012. The asset has a useful life of 8 years and a salvage value of $6,840. For tax purposes, the MACRS class life is 5 years. Compute tax depreciation for each year 2012--2017. Question 22 Celine Dion Corporation purchases a patent from Salmon Company on January 1, 2012, for $53,220. The patent has a remaining legal life of 16 years. Celine Dion feels the patent will be useful for 10 years. Prepare Celine Dion's journal entries to record the purchase of the patent and 2012 amortization. Question 23 Karen Austin Corporation has capitalized software costs of $757,200, and sales of this product the first year totaled $415,380. Karen Austin anticipates earning $969,220 in additional future revenues from this product, which is estimated to have an economic life of 4 years. Compute the amount of software cost amortization for the first year. Question 24 Jeff Beck is a farmer who owns land which borders on the right-of-way of the Northern Railroad. On August 10, 2012, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Beck had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Beck in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Beck appears inclined to accept the Railroad's offer. The Railroad's 2012 financial statements should include the following related to the incident: Question 25 Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley purchased $62,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of $1,480. On July 3, Roley returned damaged goods and received credit of $6,200. On July 10, Roley paid for the goods. Prepare all necessary journal entries for Roley. Question 26 Take moto Corporation borrowed $115,800 on November 1, 2012, by signing a $118,406, 3-month, zero-interest-bearing note. Prepare Take moto's November 1, 2012, entry; the December 31, 2012, annual adjusting entry; and the February 1, 2013, entry. Question 27 White side Corporation issues $648,000 of 9% bonds, due in 11 years, with interest payable semiannually. At the time of issue, the annual market rate for such bonds is 10%. Compute the issue price of the bonds. Question 28 Indiana Jones Company enters into a 7-year lease of equipment on January 1, 2012, which requires 7 annual payments of $38,300 each, beginning January 1, 2012. In addition, the lessee guarantees a residual value of $20,810 at lease-end. The equipment has a useful life of 7 years. Assume that for Lost Ark Company, the lessor, collectibility is reasonably predictable, there are no important uncertainties concerning costs, and the carrying amount of the machinery is $205,180. Prepare Lost Ark's January 1, 2012, journal entries. Question 29 On January 1, 2012, Irwin Animation sold a truck to Peete Finance for $25,800 and immediately leased it back. The truck was carried on Irwin's books at $19,300. The term of the lease is 5 years, and title transfers to Irwin at lease-end. The lease requires five equal rental payments of $7,515 at the end of each year. The appropriate rate of interest is 14%, and the truck has a useful life of 5 years with no salvage value. Prepare Irwin's 2012 journal entries.