13. (TCO H) On January 2, Year 1, Logan Co. purchased a manufacturing machine for $864,000.

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13. (TCO H) On January 2, Year 1, Logan Co. purchased a manufacturing machine for $864,000. The machine has an

8­year estimated life and a $144,000 estimated salvage value. Logan expects to manufacture 1,800,000 units over the life of the machine. During Year 2, Logan manufactured 300,000 units.

Calculate the Year 2 depreciation expense using (1) straight line depreciation and (2) double-declining balance depreciation.

 
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1. (TCO 4) Loin Cabinetry produces two models of home shelving

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1. (TCO 4) Loin Cabinetry produces two models of home shelving, the Basic and

the Mega. Data on operations and costs for November are:

Compute the unit cost for each model, assuming Loin Cabinetry uses:

(a) direct labor hours to allocate overhead costs;

(b) direct labor costs to allocate overhead costs; and

(c) machine hours to allocate overhead costs. (Points : 30)

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On January 3, 2014, Dave’s Excavating Company purchased a bulldozer for $200,000

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On January 3, 2014, Dave’s Excavating Company purchased a bulldozer for $200,000. In addition to the basic

purchase price, the company paid sales tax of $12,000 and freight charges of $11,000. The bulldozer will be used for 36,000 machine hours. Dave estimates that the bulldozer will have a useful life of 5 years and no residual value.

Required:
I. Compute the cost of the asset.
II. Compute the depreciation expense for 2014 and 2015 using the:
i. straight-line method
ii. units-of-production method assuming the bulldozer was used 5,000 machine hours in 2014 and 20,000 machine hours in 2015.
iii. double declining balance method

 
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1. Capital losses: a) can offset ordinary income up to a maximum of $3000 in a tax year

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1. Capital losses:

a) can offset ordinary income up to a maximum of $3000 in a tax year

b) may be

carried back two years and then carried forward 15 years

c) may only be claimed against other investment income

d) are disallowed if the tax payer’s filling status is married filling separately

2. FICA applies to which of the following?

a) individuals who report only interest and dividend income

b) corporations that report less than $50,000 in gross receipts

c) individuals who report only distributions from retirement accounts

d) independent contractors reporting net earnings from self-employment of $400 or more

Please choose the correct answers.

 
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