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Depreciation Methods and Revaluation in Accounting, Quizzes of Financial Accounting

University of Pangasinan (UP)Financial Accounting

Various examples of depreciation methods, including straight line, declining balance, units of production, and composite methods. It also covers revaluation of assets, such as appraised value, replacement cost, and changes in useful life and residual value. Additionally, it includes examples of recording revaluation surplus.

Typology: Quizzes

2023/2024

Available from 03/17/2024

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Depreciation methods
Use the following information for the next four cases:
Fact pattern
On January 1, 20x1, SIMPLETON FOOL Co. acquired equipment with an estimated useful
life of 4 years and a residual value of ₱80,000 for a total purchase cost of ₱400,000.
Straight line method
Case #1: Use the straight-line method for the next two questions.
1. How much is the depreciation expense in the 2nd year?
a. 100,000 b. 80,000 c. 200,000 d. 160,000
2. How much is the accumulated depreciation on December 31, 20x2?
a. 100,000 b. 80,000 c. 200,000 d. 160,000
Sum-of-the-years’ digits (SYD) method
Case #2: Use the sum-of-the-years’ digits (SYD) method for the next two questions.
3. How much is the depreciation expense in the 2nd year?
a. 120,000 b. 96,000 c. 128,000 d. 224,000
4. How much is the accumulated depreciation on December 31, 20x2?
a. 120,000 b. 96,000 c. 128,000 d. 224,000
Double declining balance method
Case #3: Use the double declining balance method for the next two questions.
5. How much is the depreciation expense in the 2nd year?
a. 120,000 b. 100,000 c. 128,000 d. 224,000
6. How much is the accumulated depreciation on December 31, 20x2?
a. 120,000 b. 96,000 c. 160,000 d. 300,000
Units of production method (Activity method or Variable-charge method)
Case #4: Use the units of production method for the next two questions:
The equipment has an expected total output of 160,000 units and an expected total
input of 40,000 hours.
Information on actual operations is presented below:
Ye
ar
Units
produced
Manufacturing
hours
20x
1
60,000
16,000
20x
2
30,000
8,000
20x
3
45,000
12,000
20x
4
25,000
4,000
160,000
40,000
7. If SIMPLETON Co. uses the output method, how much is the depreciation expense in
the 2nd year?
a. 128,000 b. 96,000 c. 60,000 d. 64,000
8. If SIMPLETON Co. uses the output method, how much is the accumulated depreciation
on December 31, 20x2?
a. 120,000 b. 180,000 c. 192,000 d. 256,000
9. If SIMPLETON Co. uses the input method, how much is the depreciation expense in
the 2nd year?
a. 64,000 b. 96,000 c. 60,000 d. 64,000
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Depreciation methods Use the following information for the next four cases: Fact pattern On January 1, 20x1, SIMPLETON FOOL Co. acquired equipment with an estimated useful life of 4 years and a residual value of ₱80,000 for a total purchase cost of ₱400,000. Straight line method Case #1: Use the straight-line method for the next two questions.

  1. How much is the depreciation expense in the 2nd^ year? a. 100,000 b. 80,000 c. 200,000 d. 160,
  2. How much is the accumulated depreciation on December 31, 20x2? a. 100,000 b. 80,000 c. 200,000 d. 160, Sum-of-the-years’ digits (SYD) method Case #2: Use the sum-of-the-years’ digits (SYD) method for the next two questions.
  3. How much is the depreciation expense in the 2nd^ year? a. 120,000 b. 96,000 c. 128,000 d. 224,
  4. How much is the accumulated depreciation on December 31, 20x2? a. 120,000 b. 96,000 c. 128,000 d. 224, Double declining balance method Case #3: Use the double declining balance method for the next two questions.
  5. How much is the depreciation expense in the 2nd^ year? a. 120,000 b. 100,000 c. 128,000 d. 224,
  6. How much is the accumulated depreciation on December 31, 20x2? a. 120,000 b. 96,000 c. 160,000 d. 300, Units of production method (Activity method or Variable-charge method) Case #4: Use the units of production method for the next two questions: The equipment has an expected total output of 160,000 units and an expected total input of 40,000 hours. Information on actual operations is presented below: Ye ar Units produced Manufacturing hours 20x 1 60,000 16, 20x 2 30,000 8, 20x 3 45,000 12, 20x 4 25,000 4, 160,000 40,
  7. If SIMPLETON Co. uses the output method , how much is the depreciation expense in the 2nd^ year? a. 128,000 b. 96,000 c. 60,000 d. 64,
  8. If SIMPLETON Co. uses the output method , how much is the accumulated depreciation on December 31, 20x2? a. 120,000 b. 180,000 c. 192,000 d. 256,
  9. If SIMPLETON Co. uses the input method , how much is the depreciation expense in the 2nd^ year? a. 64,000 b. 96,000 c. 60,000 d. 64,
  1. If SIMPLETON Co. uses the input method , how much is the accumulated depreciation on December 31, 20x2? a. 120,000 b. 210,000 c. 192,000 d. 256, Increasing depreciation charge under double declining balance method
  2. The following information pertains to an equipment owned by RABBLE MOB Co.: Cost 800, Useful life 5 years Double declining rate (2/ 5 year life) 40% Residual value None How much is the depreciation in 20x5? a. 41,472 b. 103,680 c. 86,400 d. 0 Partial year depreciation Use the following information for the next three questions: DEPLORABLE BAD Co. acquired a machine on September 21, 20x1 for a total cost of ₱160,000. The machine was estimated to have a useful life of 4 years and a salvage value of ₱10,000.
  3. How much is the depreciation expense in 20x2 under the straight-line method? a. 37,500 b. 93,750 c. 36,400 d. 35,
  4. How much is the depreciation expense in 20x2 under the sum-of-years’ digits method? a. 45,000 b. 11,250 c. 56,250 d. 57,
  5. How much is the depreciation expense in 20x2 under the double declining balance method? a. 70,000 b. 60,000 c. 10,000 d. 0 Composite method Use the following information for the next four questions: On January 1, 20x1, DEVIOUS CROOKED Co. purchased the following: Cost Residual value Useful life Machine tools 80,000 4,000 3 years Meters costing 64,000 2,000 5 years Returnable containers 120,000 - 6 years
  6. What is the composite life? a. 5.40 b. 5 c. 4.50 d. 4.
  7. What is the composite rate? a. 21.87% b. 22.21% c. 95.45% d. 4.50%
  8. How much is the depreciation expense in 20x1? a. 57,733 b. 56,000 c. 58,667 d. 59,
  9. During 20x3, machine tools with original cost of ₱20,000 and residual value of ₱2,000 were sold for ₱6,000. How much is the gain (loss) on the sale? a. (345) b. 430 c. (667) d. 0 Retirement and Replacement methods Use the following information for the next two questions: The small tools account of ATROCIOUS CRUEL Co. has a balance of ₱600,000 as of January 1, 20x1. Movements in this account during the year are as follows: Feb. April Sept. Nov. Cost of newly acquired small tools 40,000 - 120,000 88, Cost of old small tools retired 24,000 48,000 - 72, Proceeds from sale of old 3,20 - 4,
  1. On January 1, 20x1, DISCORDANT DISAGREEING Co. acquired machinery for a total cost of ₱80,000,000. The machinery is depreciated using the double declining balance method over a period of 10 years. On January 1, 20x4, DISCORDANT Co. changed its depreciation method to straight line method. How much is the depreciation expense in 20x4? a. 5,815,428 b. 7,314,286 c. 6,581,342 d. 5,851, Change in depreciation method (from SYD to DDB)
  2. On January 1, 20x1, KNAVE RASCAL Co. acquired machinery for a total cost of ₱80,000,000. The machinery is depreciated using the SYD method over a period of 10 years. On January 1, 20x4, KNAVE Co. changed its depreciation method to double declining balance method. How much is the depreciation expense in 20x4? a. 40,727,272 b. 11,635,782 c. 12,556,780 d. 13,556, Change in useful life and residual value
  3. On January 1, 20x1, SMUTTY OBSCENE Co. acquired machinery for a total cost of ₱80,000,000 and estimated residual value of ₱8,000,000. The machinery is depreciated using the straight line method over a period of 10 years. On January 1, 20x4, SMUTTY Co. revised the total useful life of the asset to 15 years from acquisition date and the residual value to ₱10,400,000. How much is the depreciation expense in 20x4? a. 4,000,000 b. 3,899,567 c. 4,010,250 d. 4,129, Improvements and Replacements Use the following information for the next two questions: ENTREAT Co. acquired an aircraft from BEG, Inc. on January 1, 20x1 for a total cost of ₱24,000,000. The aircraft is estimated to have a useful life of 10 years. ENTREAT Co. uses the straight line method of depreciation. On January 1, 20x5, a major part of the equipment was replaced for a total cost of ₱3,200,000.
  4. Assuming ENTREAT Co. determined that the cost of the replaced part is ₱2,000,000, how much is the loss on replacement? a. 1,920,000 b. 1,200,000 c. 2,000,000 b. 0
  5. Assuming it is impracticable to determine the cost of the replaced part, how much is the loss on replacement? a. 1,920,000 b. 1,200,000 c. 2,000,000 b. 0 Revaluation: Appraised value
  6. On December 31, 20x1, the building of HISTRIONAL THEATRICAL Co. with a historical cost of ₱80,000,000, accumulated depreciation of ₱20,000,000, and an estimated useful life of 20 years has been assessed by an external valuer to have an appraised value of ₱100,000,000. How much is the revaluation surplus? a. 40,000,000 b. 28,000,000 c. 20,000,000 d. 10,000, Depreciated replacement cost (without residual value)
  7. On December 31, 20x1, the building of SWIMMY UNSTEADY Co. with a historical cost of ₱80,000,000, accumulated depreciation of ₱20,000,000, and an estimated useful life of 20 years has been estimated to have a replacement cost of ₱140,000,000. How much is the revaluation surplus? a. 31,500,000 b. 36,778,750 c. 45,000,000 d. 60,000, Depreciated replacement cost (with residual value)
  8. On December 31, 20x1, the building of LITHE FLEXIBLE Co. was revalued. Information on revaluation date is shown below: Cost Replacement cost Building 72,000,000 144,000, Accumulated depreciation 16,000,

Residual value 8,000,000 8,000, Remaining useful life 10 years 12 years How much is the revaluation surplus? a. 45,000,000 b. 54,000,000 c. 36,000,000 d. 46,333, Methods of recording revaluation surplus – Replacement cost Use the following information for the next three questions: On December 31, 20x1, the building of SUBTERFUGE DECEPTION Co. with a historical cost of ₱80,000,000, accumulated depreciation of ₱20,000,000, and an estimated useful life of 20 years has been estimated to have a replacement cost of ₱140,000,000. Income tax rate is 30%.

  1. How much is the revaluation surplus? a. 31,500,000 b. 36,778,750 c. 45,000,000 d. 60,000,
  2. Assuming SUBTERFUGE Co. uses the proportional method, the entry to record the revaluation includes: a. a debit to accumulated depreciation for ₱15,000, b. a debit to accumulated depreciation for ₱20,000, c. a debit to building for ₱25,000, d. a debit to building for ₱60,000,
  3. Assuming SUBTERFUGE Co. uses the elimination method, the entry to record the revaluation includes: a. a credit to accumulated depreciation for ₱20,000, b. a debit to building for ₱25,000, c. a debit to accumulated depreciation for ₱15,000, d. a debit to deferred tax for ₱13,500, Methods of recording revaluation – Appraised value Use the following information for the next two questions: On December 31, 20x1, the building of ABC Co. with a historical cost of ₱320,000,000, accumulated depreciation of ₱160,000,000, and an estimated useful life of 20 years has been assessed by an external valuer to have an appraised value of ₱200,000,000. Income tax rate is 30%
  4. The entry under the proportional method to record the revaluation includes a. a debit to accumulated depreciation for ₱40,000, b. a credit to accumulated depreciation for ₱20,000, c. a debit to building for ₱80,000, d. a credit to building for ₱80,000,
  5. The entry under the proportional method to record the revaluation includes a. a debit to accumulated depreciation for ₱40,000, b. a debit to accumulated depreciation for ₱20,000, c. a debit to building for ₱80,000, d. a credit to building for ₱80,000, Revaluation: Change in useful life Use the following information for the next two questions: On January 1, 20x1, the building of PRODIGIOUS EXTRAORDINARY Co. with a historical cost of ₱80,000,000 purchased 5 years ago with an estimated useful life of 20 years has been estimated to have a replacement cost of ₱140,000,000. The building is estimated to have a remaining useful life of 25 years as of January 1, 20x1. Depreciation is computed using the straight line method. Income tax rate is 30%.
  6. How much is the revaluation surplus? a. 31,500,000 b. 45,000,000 c. 37,500,000 d. 36,788,
  7. How much is the depreciation expense in 20x1? a. 2,940,000 b. 4,200,000 c. 3,200,000 d. 3,333,