Angel, Inc. purchased a crane at a cost of $80,000. The crane has an estimated r
ID: 2477146 • Letter: A
Question
Angel, Inc. purchased a crane at a cost of $80,000. The crane has an estimated residual value of $5,000 and an estimated life of 8 years, or 12,500 hours of operation. The crane was purchased on January l, 2011 and was used 2.700 hours in 2011 and 2,600 hours in 2012. What amount will Angel, Inc. report as depreciation expense over the 8-year life of the equipment? $60,000 $75,000 $72,000 $80,000 If Angel uses the straight-line method, what is the book value at December 31, 2013? $46,875 $62,500 $51,875 $67,500 If Angel uses the units-of-production method, what is the depreciation rate per hour for the equipment? $4.00 $6.00 $5.00 $7.50 How should intangible assets be disclosed on the balance sheet? As a reduction of stockholders' equity At cost in the current assets section At the estimated market value at the balance sheet date Net of the costs already amortizedExplanation / Answer
8 ) C - 75000
Depreciation per annum = (Cost of the asset - scrapvalue) / no. of years
= ( 80000 - 5000) / 8
= $ 9375
Depreciation for 8 years = $ 9375 * 8 = $ 75000.
9) Depreciation per annum = $ 9375
Depreciation for the year end 2013 = 75000 - (9375 * 3)
= 75000 - 28125
= $ 46875 ( Answer A)
10) C. $ 6.0
Machine value = 80000 - 5000 = $ 75000
Machine hours = 12500 hours
Depreciation under units of production method = 75000 / 12500 = 6.0