Question 1

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

Accepted Answer

A) 25% 
B) 50% 
C) 100% 
D) 75% 
E) None of these 
A) 25% 
B) 50% 
C) 100% 
D) 75% 
E) None of these

Question 2

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?

Accepted Answer

A) $8,000 
B) $25,000 
C) $17,000 
D) $5,000 
E) None of these 
A) $8,000 
B) $25,000 
C) $17,000 
D) $5,000 
E) None of these

Question 3

Match the following terms with their definitions.
-Declining-balance method

Accepted Answer

A) Residual value not deducted in calculation 
B) Even amount of depreciation expense each year 
C) Depreciation based on usage 
D) Depreciation that has been built up 
E) An allocation of the cost of an asset
F)Estimated life of asset
G)Cost minus accumulated depreciation
H)1 divided by number of years of expected life
I)A table showing depreciation allocation
J)Estimated value after AFIC depreciation taken
K)Result of Tax Reform Act of 1986
L)Salvage value 
A) Residual value not deducted in calculation 
B) Even amount of depreciation expense each year 
C) Depreciation based on usage 
D) Depreciation that has been built up 
E) An allocation of the cost of an asset
F)Estimated life of asset
G)Cost minus accumulated depreciation
H)1 divided by number of years of expected life
I)A table showing depreciation allocation
J)Estimated value after AFIC depreciation taken
K)Result of Tax Reform Act of 1986
L)Salvage value

Question 4

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 5

Using a straight-line depreciation schedule, at what amount is the company depreciating its equipment if the cost of the equipment is $45,000 and it has a residual value of $5,000 with a useful life of four years?

Accepted Answer

$45,000 - $5,000 = $

Question 6

Computers will not depreciate.

Accepted Answer

A) True 
 B)False

Question 7

ACRS came before MACRS.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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 10

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

Accepted Answer

A) True 
 B)False

Question 11

Trade-in value is the same as the residual value.

Accepted Answer

A) True 
 B)False

Question 12

Match the following terms with their definitions.
-Accumulated depreciation

Accepted Answer

A) Residual value not deducted in calculation 
B) Even amount of depreciation expense each year 
C) Depreciation based on usage 
D) Depreciation that has been built up 
E) An allocation of the cost of an asset
F)Estimated life of asset
G)Cost minus accumulated depreciation
H)1 divided by number of years of expected life
I)A table showing depreciation allocation
J)Estimated value after AFIC depreciation taken
K)Result of Tax Reform Act of 1986
L)Salvage value 
A) Residual value not deducted in calculation 
B) Even amount of depreciation expense each year 
C) Depreciation based on usage 
D) Depreciation that has been built up 
E) An allocation of the cost of an asset
F)Estimated life of asset
G)Cost minus accumulated depreciation
H)1 divided by number of years of expected life
I)A table showing depreciation allocation
J)Estimated value after AFIC depreciation taken
K)Result of Tax Reform Act of 1986
L)Salvage value

Question 13

Match the following terms with their definitions.
-Book value

Accepted Answer

A) Residual value not deducted in calculation 
B) Even amount of depreciation expense each year 
C) Depreciation based on usage 
D) Depreciation that has been built up 
E) An allocation of the cost of an asset
F)Estimated life of asset
G)Cost minus accumulated depreciation
H)1 divided by number of years of expected life
I)A table showing depreciation allocation
J)Estimated value after AFIC depreciation taken
K)Result of Tax Reform Act of 1986
L)Salvage value 
A) Residual value not deducted in calculation 
B) Even amount of depreciation expense each year 
C) Depreciation based on usage 
D) Depreciation that has been built up 
E) An allocation of the cost of an asset
F)Estimated life of asset
G)Cost minus accumulated depreciation
H)1 divided by number of years of expected life
I)A table showing depreciation allocation
J)Estimated value after AFIC depreciation taken
K)Result of Tax Reform Act of 1986
L)Salvage value

Question 14

A depreciation schedule for partial years must cover at least three years.

Accepted Answer

A) True 
 B)False

Question 15

Apple Co. bought a car with an estimated life of five years for $12,000. The residual value of the car is $2,000. What will be the amount of depreciation expense each year using the straight-line method? If the car was bought on April 3, what would be the depreciation for the first year?

Accepted Answer

($12,000 - $2,000)/

Question 16

Match the following terms with their definitions.
-Useful life

Accepted Answer

A) Residual value not deducted in calculation 
B) Even amount of depreciation expense each year 
C) Depreciation based on usage 
D) Depreciation that has been built up 
E) An allocation of the cost of an asset
F)Estimated life of asset
G)Cost minus accumulated depreciation
H)1 divided by number of years of expected life
I)A table showing depreciation allocation
J)Estimated value after AFIC depreciation taken
K)Result of Tax Reform Act of 1986
L)Salvage value 
A) Residual value not deducted in calculation 
B) Even amount of depreciation expense each year 
C) Depreciation based on usage 
D) Depreciation that has been built up 
E) An allocation of the cost of an asset
F)Estimated life of asset
G)Cost minus accumulated depreciation
H)1 divided by number of years of expected life
I)A table showing depreciation allocation
J)Estimated value after AFIC depreciation taken
K)Result of Tax Reform Act of 1986
L)Salvage value

Question 17

Match the following terms with their definitions.
-MACRS

Accepted Answer

A) Residual value not deducted in calculation 
B) Even amount of depreciation expense each year 
C) Depreciation based on usage 
D) Depreciation that has been built up 
E) An allocation of the cost of an asset
F)Estimated life of asset
G)Cost minus accumulated depreciation
H)1 divided by number of years of expected life
I)A table showing depreciation allocation
J)Estimated value after AFIC depreciation taken
K)Result of Tax Reform Act of 1986
L)Salvage value 
A) Residual value not deducted in calculation 
B) Even amount of depreciation expense each year 
C) Depreciation based on usage 
D) Depreciation that has been built up 
E) An allocation of the cost of an asset
F)Estimated life of asset
G)Cost minus accumulated depreciation
H)1 divided by number of years of expected life
I)A table showing depreciation allocation
J)Estimated value after AFIC depreciation taken
K)Result of Tax Reform Act of 1986
L)Salvage value

Question 18

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 19

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 20

Bill Murray bought fixtures (seven-year class)for $13,000. Using MACRS, what is the depreciation expense in year 2?

Accepted Answer

The answer of Bill Murray bought fixtures (seven-year class)for $13,000....

Exam 17: Depreciation

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

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?

Match the following terms with their definitions. -Declining-balance method

Which one of the following does not depreciate?

Using a straight-line depreciation schedule, at what amount is the company depreciating its equipment if the cost of the equipment is $45,000 and it has a residual value of $5,000 with a useful life of four years?

Computers will not depreciate.

ACRS came before MACRS.

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

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.

Trade-in value is the same as the residual value.

Match the following terms with their definitions. -Accumulated depreciation

Match the following terms with their definitions. -Book value

A depreciation schedule for partial years must cover at least three years.

Apple Co. bought a car with an estimated life of five years for $12,000. The residual value of the car is $2,000. What will be the amount of depreciation expense each year using the straight-line method? If the car was bought on April 3, what would be the depreciation for the first year?

Match the following terms with their definitions. -Useful life

Match the following terms with their definitions. -MACRS

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

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

Bill Murray bought fixtures (seven-year class)for $13,000. Using MACRS, what is the depreciation expense in year 2?

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