Concept #1: Depreciation: Summary of Main Methods

Additional Problems
Panera Bread Company owns a bread-slicing machine, which initially cost $10,000. As of June 5, 2005, the balance in the accumulated depreciation account for the bread slicer was $8,000. The slicer was sold to the St. Louis Bread Company on June 6, 2005 for $1,500. The journal entry to record the sale of the bread slicer will include a: a. Debit to Accumulated Depreciation for $8,000 b. Debit to Accumulated Depreciation for $1,500 c. Credit to Accumulated Depreciation for $8,000 d. Credit to Accumulated Depreciation for $1,500
How is net book value calculated? a. acquisition cost of the asset minus its accumulated depreciation b. acquisition cost of the asset minus its depreciation expense c. estimated value of the asset minus its accumulated depreciation d. acquisition cost of the asset plus it accumulated depreciation
ABC Company began operations on August 1, 2009 and entered into the following transactions during 2009: 1. On August 1, ABC Company sold common stock to owners in the amount of $200,000 and borrowed $100,000 from the local bank on a 10-month, 12% note payable. 2. On September 1, ABC Company purchased a piece of equipment costing $80,000 by paying $20,000 in cash and agreeing to pay the remainder within six months. The equipment was assigned a 5-year life and a $5,000 residual value. 3. On October 1, ABC Company received $50,000 cash from a customer for services to be performed over the next 10 months. 4. On November 1, ABC Company paid $12,000 cash for a one-year insurance policy. 5. On December 1, ABC Company paid $10,000 of the amount owed for the equipment purchased on September 1. Calculate the amount of  total assets that ABC Company would report in its December 31, 2009 balance sheet after all the above transactions are recorded and all necessary adjusting entries are made.
Eagle Corporation., purchased an asset on January 1, 2009. They chose the double-declining- balance depreciation method to depreciate the asset. Had Eagle Corporation chosen the straight-line method a. depreciation expense would be greater in 2009. b. the book value of the asset would be more at the end of 2009. c. net income would be less in 2009. d. all of above are correct. e. none of the above is correct.
American Airlines purchased a machine on January 1, 2007, for $80,000. The company bookkeeper incorrectly used a 10-year life instead of an 8-year life to depreciate the machine. The effect of this error on the 2007 financial statements would be an a. overstatement of assets offset by an understatement of retained earnings. b. understatement of assets offset by an understatement of retained earnings. c. overstatement of assets, income, and stockholders' equity. d. overstatement of assets and an understatement of liabilities. e. None of the above is correct.