Reference no: EM132554172

Questions -

Q1. Fox Co. issued $10,000,000 of bonds at 102. Each bond contains 20 detachable stock warrants that allow the bondholder to purchase a share of Owl's common stock for $55. Immediately after the issue, the bonds without the warrants were selling for $1,005. The stock warrants had no readily determinable value. How much will be credited to Paid-in Capital-Stock Warrants?

A) $0

B) $150,000

C) $75,000

D) $100,000

Q2. Fox, Inc. has one plant asset with an original cost of $940,000, a $60,000 expected residual value, and a 25 year estimated useful life. At the beginning of 2019, following 15 full years of depreciation, Fox determined that the asset will only be useful for another 4 years and decreased the expected residual value to $50,000. This change is needed to reflect advanced technology used in newer equipment currently available on the market. Fox uses the straight-line method of depreciation. Ignoring any tax effects, what is Fox's depreciation expense for 2019?

A) $75,500

B) $90,500

C) $222,500

D) $81,500