Question 1

Depreciation expense is listed on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

A new truck costing $50,000 with a residual value of $4,000 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)  $20,000 
B)  $12,000 
C)  $18,000 
D)  $7,200 
E)  None of these 
A)  $20,000 
B)  $12,000 
C)  $18,000 
D)  $7,200 
E)  None of these

Question 3

Young Corporation bought a car with an estimated life of five years for $25,000. The residual value of the car is $5,000. After three years, the car was sold for $11,000. What was the difference between book value and selling price if Young used the straight-line method of depreciation?

Accepted Answer

The answer of Young Corporation bought a car with an...

Question 4

If a car is driven strictly for pleasure, it still can be depreciated.

Accepted Answer

A) True 
 B)False

Question 5

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

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

Cost minus residual divided by number of years equals depreciation expense taken each year in the straight-line method.

Accepted Answer

A) True 
 B)False

Question 8

Accumulated depreciation records the history of depreciation taken to date.

Accepted Answer

A) True 
 B)False

Question 9

The units-of-production method is based on the passage of time.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Which one of the following does not depreciate?

Accepted Answer

A)  Building 
B)  Land 
C)  Truck 
D)  Computer 
E)  None of these 
A)  Building 
B)  Land 
C)  Truck 
D)  Computer 
E)  None of these

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

All assets that last longer than one year will be depreciated.

Accepted Answer

A) True 
 B)False

Question 14

A company using the straight-line method over 10 years would be depreciating its asset at a 10% rate each year.

Accepted Answer

A) True 
 B)False

Question 15

Depreciation is an exact science that requires no estimation.

Accepted Answer

A) True 
 B)False

Question 16

Karen Knoll Co. bought a machine that cost $8,000. The residual value is $1,000, and the machine life is estimated at four years. Can you prepare a depreciation schedule assuming twice the straight-line rate? Karen uses the declining-balance method.

Accepted Answer

@#IMG-DLM& No depreciation exp

Question 17

ACRS came before MACRS.

Accepted Answer

A) True 
 B)False

Question 18

Cost recovery using MACRS is calculated by:

Accepted Answer

A)  Rate divided by cost 
B)  Rate* cost 
C)  Rate + cost 
D)  Rate - cost 
E)  None of these 
A)  Rate divided by cost 
B)  Rate* cost 
C)  Rate + cost 
D)  Rate - cost 
E)  None of these

Question 19

Book value is:

Accepted Answer

A)  Cost plus accumulated depreciation 
B)  Cost minus accumulated depreciation 
C)  Cost divided by accumulated depreciation 
D)  Cost times accumulated depreciation 
E)  None of these 
A)  Cost plus accumulated depreciation 
B)  Cost minus accumulated depreciation 
C)  Cost divided by accumulated depreciation 
D)  Cost times accumulated depreciation 
E)  None of these

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 14: Depreciation

Depreciation expense is listed on the balance sheet.

A new truck costing $50,000 with a residual value of $4,000 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:

Young Corporation bought a car with an estimated life of five years for $25,000. The residual value of the car is $5,000. After three years, the car was sold for $11,000. What was the difference between book value and selling price if Young used the straight-line method of depreciation?

If a car is driven strictly for pleasure, it still can be depreciated.

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

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

Cost minus residual divided by number of years equals depreciation expense taken each year in the straight-line method.

Accumulated depreciation records the history of depreciation taken to date.

The units-of-production method is based on the passage of time.

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:

Which one of the following does not depreciate?

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

All assets that last longer than one year will be depreciated.

A company using the straight-line method over 10 years would be depreciating its asset at a 10% rate each year.

Depreciation is an exact science that requires no estimation.

Karen Knoll Co. bought a machine that cost $8,000. The residual value is $1,000, and the machine life is estimated at four years. Can you prepare a depreciation schedule assuming twice the straight-line rate? Karen uses the declining-balance method.

ACRS came before MACRS.

Cost recovery using MACRS is calculated by:

Book value is:

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

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