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Bizhelp
Bizhelp, Accountant
Category: Business and Finance Homework
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Experience:  BA degree and Certified Public Accountant
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Moped, Inc. purchased machinery at a cost of $22,000

Resolved Question:

Moped, Inc. purchased machinery at a cost of $22,000 on January 1, 2009. The expected useful life is 5 years and the asset is expected to have salvage value of $2,000. Moped depreciates its assets via the double-declining balance method.

What is the firm's depreciation expense for the year ended De. 31, 2009?
A) $2000
B) $4400
C) $6000
D) $8800

What is the accumulated depreciation for this asset on Dec. 31st, 2010?
A) $4400
B) $5280
C) $8800
D) $14080

What is the firm's gain or loss if the machinery is sold for $11000 on Dec. 31, 2010
A) gain of $4000
B) Gain fo $3080
C) Loss of $600
D) Loss of $4000

When a machine having a net book value of $5000 is sold for $4000:
A) current assets increase, equipment (net) increases, and net income increases
B) current assets increase, equipment (net) decreases, and net income increases
C) current assets increase, equipment (net) decreases, and net income decreases
D) current assets increase, equipment (net) increases, and net income dencreases

Submitted: 6 years ago.
Category: Business and Finance Homework
Expert:  Bizhelp replied 6 years ago.
Hello Customer,

Thanks for your questions.

What is the firm's depreciation expense for the year ended De. 31, 2009?
$22,000 cost * 40% (twice straight-line rate) =$8800 first year depreciation.
D) $8800

What is the accumulated depreciation for this asset on Dec. 31st, 2010?
$22,000-$8800 depreciation for 2009=$13,200 book value x 40% = $5280 depreciation for 2010.
B) $5280

What is the firm's gain or loss if the machinery is sold for $11000 on Dec. 31, 2010
$22,000-$8800-$5280=$7920 book value on 12/31/10. $11,000 sales proceeds-$7920 book value=$3080 gain.
B) Gain fo $3080

When a machine having a net book value of $5000 is sold for $4000:
C) current assets increase, equipment (net) decreases, and net income decreases

Hope this helps!
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