Exam 17: Depreciation

Roche Biotech provides company cars for its salespeople that cost an average of $25,000. Using the class recovery system of five years, what is the depreciation expense in year 2 of the MACRS?

If a car is depreciated in four years, the rate of depreciation using twice the straight-line rate 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)?

Jay Corp. bought a machine for $15,000. The machine is expected to produce 10,000 units. The machine has a residual value of $5,000. Assuming the machine produces 400 units during year 1, what should the depreciation expense be?

Cost recovery using MACRS is calculated by:

Using the declining-balance method, complete the table as shown (twice the straight-line rate): Auto: $30,000 Estimated life: 5 years Residual value: $800

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:

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

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:

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

Copyrights will depreciate.

A truck costs $8,000 with a residual value of $1,000. The truck is expected to have a useful life of 70,000 miles. Assuming the truck is driven 15,000 miles the first year, the depreciation expense would be:

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?

Residual value is not used in calculating the depreciation expense per unit of product, miles driven, etc.

The book value in the units-of-production method should never go below the residual value.

Depreciation expense is listed on the balance sheet.

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

Residual value is deducted in calculating depreciation expense in the declining-balance method.

Straight-line depreciation does not:

The Modified Accelerated Cost Recovery System must be used for both financial and tax reporting.