Check Your Understanding Ch. 6-1 (#2)
Pgs. 170-174
1. Amazon purchased new equipment, $1100.00, with a shipping charge of
$115 and an installation fee of $495. How would you record this transaction
in the journal?
Debit: ___________________________________________________
$_____________
Credit: __________________________________________________
$_____________
2. Describe the role of an appraiser. Be sure to fully demonstrate your
understanding by defining and including the term appraisal value in your
response, as well as, the importance of this role.
3. Suppose Bourdain Enterprises pays $700,000 for property for a new
restaurant that includes extensive land and a nice building that needs some
renovation. An appraiser values the property at $800,000.
Land
Building
$240,000
$560,000
Allocate the purchase price to land and the building. Show all work below
and circle your answers.
4. Complete the Statement: The straight-line method is based on the assumption
that...
5. Suppose Bourdain then decided to purchase a new truck for the property
above for $35,000. The truck has a useful life of 5 years and an estimated
salvage value of $2,500. Determine the truck’s depreciable cost and the
annual depreciation using the straight-line method. Show your formulas and
all work.
a. Depreciable Cost: ______________________________________________________
b. Annual Depreciation: __________________________________________________