1.Dixon Company purchased a depreciable asset for $32,000.

The estimated salvage value is

$4,000, and the estimated useful life is 4 years. The double-declining balance method will be
used for depreciation. What is the depreciation expense for the second year on this asset?
(LO 1)

(a)$6,400
(b)$7,000
(c)$8,000
(d)$16,000

2.Chattanooga Company purchased a depreciable asset for $80,000 on January 1, 2015. The
estimated salvage value is $20,000, and the estimated useful life is 5 years. The straight-line
method is used for depreciation. On January 1, 2017, the company made a capital
expenditure of $16,000 for an addition to the asset. What is depreciation expense for 2017?
(LO 2)

(a)$12,000
(b)$14,400
(c)$24,000
(d)$17,333

4.Lundy Company purchased a depreciable asset for $99,000. The estimated salvage value is
$18,000, and the estimated useful life is 9 years. The double-declining balance method will
be used for depreciation. What is the depreciation expense for the second year on this
asset? Round depreciation rate to nearest percentage. (LO 1)

(a)$11,000
(b)$13,900
(c)$16,988
(d)$17,820

5.Cambodian Import Company purchased a depreciable asset for $160,000 on April 1, 2014.
The estimated salvage value is $40,000, and the estimated useful life is 5 years. The straight-
line method is used for depreciation. What is the balance in accumulated depreciation on
March 1, 2017 when the asset is sold? (LO 2)

(a)$66,000
(b)$70,000
(c)$72,000
(d)$186,667
6.Antigua Company purchased a depreciable asset for $45,000 on October 1, 2012. The
estimated salvage value is $9,000, and the estimated useful life is 6 years. The straight-line
method is used for depreciation. What is the book value on July 1, 2017 when the asset is
sold? (LO 2)
15
(a)$10,500
(b)$15,750
(c)$25,500
(d)$34,500

7. Erie Corporation owns machinery with a book value of $2,200,000. It is estimated that the
machinery will generate future cash flows of $1,995,000. The machinery has a fair value of
$1,915,000. The journal entry to record the impairment loss will (LO 3)

(a)record a discontinued operations loss of $80,000.

(b)increase the asset's Accumulated Depreciation account by $285,000.
(c)reduce income from continuing operations by $205,000.
(d)include a $285,000 credit to the asset account.

8. Lebanon Corporation owns equipment with a cost of $320,000 and accumulated

depreciation at December 31, 2017 of $120,000. It is estimated that the machinery will
generate future cash flows of $175,000. The machinery has a fair value of $155,000. If
Lebanon uses IFRS, the company should recognize a loss on impairment of (LO 7)

(a)$0.
(b)$25,000.
(c)$35,000.
(d)$45,000.