Question 1

Which one is not based on the passage of time?

Accepted Answer

A) Straight-line method 
B) Declining-balance method 
C) Units-of-production method 
D) None of these 
E) None of these. 
A) Straight-line method 
B) Declining-balance method 
C) Units-of-production method 
D) None of these 
E) None of these.

Question 2

Depreciation expense is listed on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 3

Depreciation is an exact science that requires no estimation.

Accepted Answer

A) True 
 B)False

Question 4

What is the depreciation expense for the first year straight-line method using the following?

Accepted Answer

A) $4,400 
B) $5,200 
C) $4,000 
D) $6,000 
E) None of these 
A) $4,400 
B) $5,200 
C) $4,000 
D) $6,000 
E) None of these

Question 5

In the straight-line method, book value never goes below the residual value.

Accepted Answer

A) True 
 B)False

Question 6

In the declining-balance method, we can depreciate below the residual value.

Accepted Answer

A) True 
 B)False

Question 7

Depreciation expense in the declining-balance method is calculated by the depreciation rate:

Accepted Answer

A) Times book value at beginning of year 
B) Plus book value at end of year 
C) Divided by book value at beginning of year 
D) Times accumulated depreciation at year end 
E) None of these 
A) Times book value at beginning of year 
B) Plus book value at end of year 
C) Divided by book value at beginning of year 
D) Times accumulated depreciation at year end 
E) None of these

Question 8

Depreciation expense is located on the:

Accepted Answer

A) Income statement 
B) Balance sheet 
C) Income statement and Balance sheet 
D) None of these 
E) None of these. 
A) Income statement 
B) Balance sheet 
C) Income statement and Balance sheet 
D) None of these 
E) None of these.

Question 9

Using the declining-balance method, complete the table as shown (twice the straight-line rate):
Auto: $26,000
Estimated life: 10 years
Residual value: $600

Accepted Answer

The answer of Using the declining-balance method, complete the table...

Question 10

Land can be depreciated.

Accepted Answer

A) True 
 B)False

Question 11

A truck costs $9,200 with a residual value of $1,000. It is estimated that the useful life of the truck is four years. The amount of depreciation expense in year 2 using the declining-balance method at twice the straight-line rate is:

Accepted Answer

A) $2,300 
B) $4,600 
C) $3,200 
D) $6,400 
E) None of these 
A) $2,300 
B) $4,600 
C) $3,200 
D) $6,400 
E) None of these

Question 12

Product obsolescence means the asset has been fully depreciated.

Accepted Answer

A) True 
 B)False

Question 13

MACRS is not used for tax purposes.

Accepted Answer

A) True 
 B)False

Question 14

A new truck costing $60,000 with a residual value of $6,000 has an estimated useful life of five years. Using the declining-balance method at twice the straight-line rate, the depreciation expense in year 2 is:

Accepted Answer

A) $24,000 
B) $14,000 
C) $14,400 
D) $2,400 
E) None of these 
A) $24,000 
B) $14,000 
C) $14,400 
D) $2,400 
E) None of these

Question 15

In a straight-line depreciation schedule, the depreciation expense is the same each year.

Accepted Answer

A) True 
 B)False

Question 16

A new piece of equipment costs $18,000 with a residual value of $600 and an estimated useful life of five years. Assuming twice the straight-line rate, the book value at the end of year 2 using the declining-balance method is:

Accepted Answer

A) $7,200 
B) $6,480 
C) $11,520 
D) $18,000 
E) None of these 
A) $7,200 
B) $6,480 
C) $11,520 
D) $18,000 
E) None of these

Question 17

Federal Express bought material handling equipment for its hub operations that cost $180,000. Using the MACRS, what is the depreciation expense in year 3 (using a five-year class)?

Accepted Answer

A) $15,360 
B) $40,000 
C) $43,560 
D) $34,560 
E) None of these 
A) $15,360 
B) $40,000 
C) $43,560 
D) $34,560 
E) None of these

Question 18

The straight-line method of depreciation is really an accelerated type of depreciation.

Accepted Answer

A) True 
 B)False

Question 19

Using the straight-line method, what is the depreciation expense for a computer that cost $4,500, has a residual value of $700, and has a life of four years?

Accepted Answer

A) $1,125 
B) $950 
C) $1,300 
D) $1,950 
E) None of these 
A) $1,125 
B) $950 
C) $1,300 
D) $1,950 
E) None of these

Question 20

Joe Wong, owner of Cookie Palace, is discussing with his accountant which method of depreciation would be best for his new delivery truck. The cost of the truck is $20,000 with an estimated life of four years. The residual value of the truck is $2,500. Prepare a depreciation schedule using the declining-balance method at twice the straight-line rate.

Accepted Answer

The answer of Joe Wong, owner of Cookie Palace, is...

Exam 17: Appreciation

Which one is not based on the passage of time?

Depreciation expense is listed on the balance sheet.

Depreciation is an exact science that requires no estimation.

What is the depreciation expense for the first year straight-line method using the following?

In the straight-line method, book value never goes below the residual value.

In the declining-balance method, we can depreciate below the residual value.

Depreciation expense in the declining-balance method is calculated by the depreciation rate:

Depreciation expense is located on the:

Using the declining-balance method, complete the table as shown (twice the straight-line rate): Auto: $26,000 Estimated life: 10 years Residual value: $600

Land can be depreciated.

A truck costs $9,200 with a residual value of $1,000. It is estimated that the useful life of the truck is four years. The amount of depreciation expense in year 2 using the declining-balance method at twice the straight-line rate is:

Product obsolescence means the asset has been fully depreciated.

MACRS is not used for tax purposes.

A new truck costing $60,000 with a residual value of $6,000 has an estimated useful life of five years. Using the declining-balance method at twice the straight-line rate, the depreciation expense in year 2 is:

In a straight-line depreciation schedule, the depreciation expense is the same each year.

A new piece of equipment costs $18,000 with a residual value of $600 and an estimated useful life of five years. Assuming twice the straight-line rate, the book value at the end of year 2 using the declining-balance method is:

Federal Express bought material handling equipment for its hub operations that cost $180,000. Using the MACRS, what is the depreciation expense in year 3 (using a five-year class)?

The straight-line method of depreciation is really an accelerated type of depreciation.

Using the straight-line method, what is the depreciation expense for a computer that cost $4,500, has a residual value of $700, and has a life of four years?

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