Question 1

Product obsolescence means the asset has been fully depreciated.

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

What is the depreciation expense for the second year (straight-line method)using the following? $$\begin{array} { | l | c | } 
\hline \text { Cost of equipment } & \$ 14,000 \
\hline \text { Residual value } & \$ 500 \
\hline \text { Life } & 4 \text { years } \
\hline
\end{array}$$

Accepted Answer

A) $14,500 
B) $13,500 
C) $3,375 
D) $3,275 
E) None of these 
A) $14,500 
B) $13,500 
C) $3,375 
D) $3,275 
E) None of these

Question 4

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 5

MACRS is not used for tax purposes.

Accepted Answer

A) True 
 B)False

Question 6

Using the declining-balance method, complete the table as shown (twice the straight-line rate):
Auto: $26,000; Residual Value: $600; Estimated Life: 10 Yrs
 $$\begin{array} { | l | l | l | l | l | l | l | } 
\hline & & \text { Accumulated } & & & \text { Accumulated } & \
& & \text { Depreciation } & \text { Book Value } & \text { Depreciation } & \text { Depreciation } & \text { Book Value } \
 \text { Year } & \text { Cost } & \text { B.O.Y. } & \text { B.O.Y } & \text { Expense } & \text { E.O.Y. } & \text { E.O.Y } \
\hline 1 & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } \
\hline 2 & \text { G } & \text { H } & \text { I } & \text { J } & \text { K } & \text { L } \
\hline 3 & \text { M } & \text { N } & \text { O } & \text { P } & \text { Q } & \text { R } \
\hline
\end{array}$$

Accepted Answer

A. $26,000; B. $0; C. $26,000; D. $5,200

Question 7

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

Depr Exp 1 = .5 × $20,000 = $10,000;
Acc

Question 8

Accumulated depreciation records the history of depreciation taken to date.

Accepted Answer

A) True 
 B)False

Question 9

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

Product obsolescence means the asset has been fully depreciated.

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:

What is the depreciation expense for the second year (straight-line method)using the following? Cost of equipment \ 14,000 Residual value \ 500 Life 4 years

Cost recovery using MACRS is calculated by:

MACRS is not used for tax purposes.

Accumulated depreciation records the history of depreciation taken to date.

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:

Whole Numbers: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How-To Approach for Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Promissory Notes, Simple Discount Notes, and the Discount Process

Compound Interest and Present Value

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

How to Read, Analyze, and Interpret Financial Reports

Inventory and Overhead

Sales, Excise, and Property Taxes

Life, Fire, and Auto Insurance

Stocks, Bonds, and Mutual Funds

Business Statistics

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Exam 17: Depreciation

Product obsolescence means the asset has been fully depreciated.

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:

What is the depreciation expense for the second year (straight-line method)using the following? Cost of equipment \ 14,000 Residual value \ 500 Life 4 years

Cost recovery using MACRS is calculated by:

MACRS is not used for tax purposes.

Accumulated depreciation records the history of depreciation taken to date.

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:

Whole Numbers: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How-To Approach for Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Promissory Notes, Simple Discount Notes, and the Discount Process

Compound Interest and Present Value

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

How to Read, Analyze, and Interpret Financial Reports

Inventory and Overhead

Sales, Excise, and Property Taxes

Life, Fire, and Auto Insurance

Stocks, Bonds, and Mutual Funds

Business Statistics

Filters