1) Ehishal co purchase a machine for 72,000 on Jan 1 2017, the machine is expected to have a 5 year useful life and a residual value of 6000. using the sum of the years digit deprecation method the carrying value at Dec 31, 2018( the second year) would be?

2) atlas trucking incurred the following costs during 2018

15k to overhaul a tractor trailer rig, the overhaul is expected to increase the life of the rig by three years
3k to repair a broken component on the air conditioning system
60k to reconfigure the loading and unloading facilities. the reconfiguration is expected to reduce costs and increase efficiency
10k to refuel and lubricate equipment. these activities are expected to help the machines maintain their current level of production efficiency

what is the total amount of costs incurred by atlas during 2018 that should be expensed?

3). Akeem grants two weeks of paid vacation each year, with the stipulation that vacations earned each year can be taken the following year. for the year ended Dec 31, 2018, Prescott employees averaged 800 per week. a total of 700 vacation weeks earned in 2018 were taken while 500 vacations weeks earned in 2018 were not taken until 2019. what amount should Prescott accrue as a liability at Dec 31 2018 for vacation earned in 2018 but not taken?

4). in 2018 googlax software began a new development project. the project reached technological feasibility on oct 1 2018 and was released for sale to customers on Dec 1 2018, googlax incurred the following costs related to its software development project

Feb. 1 purchased material used in the software development 200k
march 1 purchased equip specifically for this single project 300k
may 31 paid workers to design and code the software 100k
nov 1 paid developers to test the software 50k
Dec 15 paid legal cost to file a patent to protect the software 80k
what amount of research and development expense should googlax report on its Dec 31 income statement ?

5). prior to issuing its 2018 financial statement, Eliana crop is informed that it is being fined by EPA for polluting a nearby river during its 2018 operations. Eliana believes it is probable and it will end up paying one of the following amounts during 2019: 100k, 200k or 300k. each cost estimate has Ana equal chance of occurring. how should Eliana account for the impending fine in its Dec 31 2018 financial statements under GAAP?

6). on Jan 1 2018, drew crop issued bonds with a face value of 300k. the bonds had a stated rate of interest of 8% and a market rate of interest of 10%. assuming the bonds were issued at a price of 291k, what is the carrying value of the bonds at Dec 31, 2018 if drew uses the effective interest rate method to amortize the bonds on an annual basis?

7). bond x and bon y are both issued by the same company, each of the bonds has a face value of 100k and both matures in 10 years, bon x pays 7% interest while bond y pays 8%, the current market rate of interest is 7% which of the following is correct

both bonds sell at face value
bond y sells for more than bond x
bond x sells for more than bond y
both bonds sell at a premium
both bonds sell at a discount

Answer rating: 100% (QA)

1 the carrying value of the asset at the end of the second year woul... View the full answer