Reported income/profit for the year ended December 31, 2020
Overstatement of opening inventory at January 1, 2019.
1. Overstatement of reported income/profit for the year ended December 31, 2020.
Understatement of ending inventory by the same amount at January 1, 2020 and December 31, 2020.
2. Understatement of reported income/profit for the year ended December 31, 2020.
Overstatement of ending inventory at December 31, 2020.
3. No effect on reported income/profit for the year ended December 31, 2020.
Overstatement of opening inventory at January 1, 2020.
Question 3 (3 points)
On July 1, year 1, ABC Ltd. purchased a piece of equipment for $500,000 plus installation costs of $45,000 that were necessary to make the equipment operational. ABC Ltd. has a December 31 fiscal year end and uses the straight-line depreciation method. The piece of equipment is expected to have a useful life of 18 years, at which time it will have a residual value of $60,000. What is the book value of the equipment as of December 31, year 3? Round your answer to the nearest dollar.
Your Answer:
Answer
Question 4 (2 points)
On January 1, year 1, ABC Ltd. purchased a piece of equipment with a cost of $150,000. The equipment has a useful life of 15 years and a residual value of $15,000 and is being depreciated under the straight-line method. The equipment was sold on July 1, year 3, for $50,000.
Calculate the gain or loss on disposal. If the amount is a gain, enter the answer as a positive amount below (i.e. 20,000). If the amount is a loss, enter the answer as a negative amount below (i.e. -20,000).
Your Answer:
Question 5 (2 points)
Mustang Crushers Ltd. has crushing equipment with a cost of $468,000. The equipment is estimated to last 18 years and to crush an estimated 176,000 units during its lifetime, at which time it will have an estimated residual value of $52,000. It is to be depreciated using the units of production depreciation method. During the current year, 35,600 units were crushed.
Calculate depreciation expense for the crushing equipment for the current year. Round your answer to the nearest dollar.