A firm has purchased a building with a useful life of 7 years. It cost $35,000 and its salvage value is estimated at $5,000. If the firm uses double declining method, what's the depreciation expense recognized in Year 2?
Answer(s): B
In Double Declining method, depreciation = (2/n)*book value. In Year 1, depreciation = (2/7)*35,000 = 10,000.Hence, in Year 2, depreciation = (2/7)*(35,000-10,000) = $7,143.
Book value of a company is equal to all of the following except
Answer(s): C
The book value of a company is its value based on the balance sheet. The balance sheet is historical and after day 1 of operations the book value of a company is almost never equal to the market value of the company.
Beginning inventory of 50 units, purchased at $550 units purchased at $1035 units purchased at $925 units sold at $1570 units sold at $12Tax rate = 40%Beginning LIFO reserve = $300Given the above, the LIFO reserve at the end of the period is ________.
Answer(s): D
COGS = Beginning inventory - Ending inventory + Purchases.FIFO COGS = 50*5 + 45*10 = $700. LIFO COGS = 35*9 + 50*10 + 10*5 = $865. Beginning inventory = 50*5 = $250. Purchases = 50*10 + 35*9 = $815.Therefore, FIFO ending inventory = 250 + 815 - 700 = 365 and LIFO ending inventory = 250 + 815 - 865 = 200.The LIFO Reserve is defined as the difference between the values of the inventory under FIFO and under LIFO. Therefore, LIFO reserve = 365 - 200 = 165.
Investments in available-for-sale securities should be valued on the balance sheet at ________.
Available-for-sale securities are investments in debt securities that are not classified as held-to- maturity or trading securities and in equity securities with readily determinable fair values that are not classified as trading securities. They are measured at fair value on the balance sheet.
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