On July 1, 20X1, Georgia Inc.

  1. On July 1, 20X1, Georgia Inc., which uses UOP depreciation, purchases a machine for $16,000; the company estimates that the machine will have a useful life of 15,000 machine hours and a salvage value of $1,000. You are given the following usage data:
  2. 20X1                                   3,000 hours
  3. 20X2                                   2,200 hours
  4. 20X3                                   6,170 hours
  5. 20X4                                   5,300 hours
  6. Depreciation expense on the machine for 20X1 is:
  7. $16,000
  8. $1,600
  9. $3,200
  10. $3,000
  11. $1,500

2 points  

QUESTION 2

  1. On July 11, 20X1, your firm purchases a machine for $125,000 with an estimated useful life of 8 years and a salvage value of $5,000. Your firm uses SYD depreciation and depreciates assets purchased between the 1st and 15th of the month for the entire month; assets purchased after the 15th of the month are treated as though they were acquired the following month. What is 20X1 depreciation expense?
  2. $13,333
  3. $13,889
  4. $27,778
  5. $26,667

2 points  

QUESTION 3

  1. Your firm uses 150% declining balance depreciation. Assets purchased between the 1st and 15th of the month are depreciated for the entire month; assets purchased after the 15th of the month are treated as though they were acquired the following month. On March 12, 20X1, your company purchases a machine for $200,000 that it estimates will last 10 years and have a salvage value of $60,000. What is 20X1 depreciation expense?
  2. $30,000
  3. $21,000
  4. $25,000
  5. $17,500

2 points  

QUESTION 4

  1. On January 1, 20X1, your company purchases for $450,000 a machine with an estimated useful life of 7 years and a salvage value of $40,000. Using SYD depreciation, what is 20X4 depreciation expense?
  2. $64,286
  3. $87,857
  4. $58,571
  5. $73,214

2 points  

QUESTION 5

  1. On January 1, 20X1, ZipCo, which uses UOP depreciation, purchases a truck for $24,000 with an estimated useful life of 100,000 miles and a residual value of $4,000. Miles driven are as follows:
  2. Year
  3. Miles
  4. 20X1
  5. 20,000
  6. 20X2
  7. 15,000
  8. 20X3
  9. 10,000
  10. 20X4
  11. 25,000
  12. 20X5
  13. 30,000
  14. What is the depreciation rate?
  15. it depends on the number of miles driven
  16. $0.24 per mile
  17. $0.20 per mile
  18. $0.28 per mile

2 points  

QUESTION 6

  1. Your company uses the DDB method. Assets purchased between the 1st and 15th of the month are depreciated for the entire month; assets purchased after the 15th of the month are treated as though they were acquired the following month. On July 1, 20X1, your company purchases a machine for $200,000 with a useful life of 10 years and a salvage value of $20,000. What is 20X2 depreciation expense?
  2. $36,000
  3. $32,400
  4. $32,000
  5. $28,800

2 points  

QUESTION 7

  1. ABC Company purchased equipment on January 1 with an original cost of $50,000. Its estimated useful life is 5 years or 180,000 hours and the residual value is $5,000. Usage of the machine for each year is as follows:
  2. Year 1
  3. 42,000 hours
  4. Year 2
  5. 37,500 hours
  6. Year 3
  7. 39,000 hours
  8. Year 4
  9. 43,200 hours
  10. Year 5
  11. 31,000 hours
  12. Calculate depreciation for the first year using the Double Declining Balance Method.
  13. $10,500
  14. $18,000
  15. $20,000
  16. $9,000
  17. $10,000

2 points  

QUESTION 8

  1. Your company uses the DDB method. Assets purchased between the 1st and 15th of the month are depreciated for the entire month; assets purchased after the 15th of the month are treated as though they were acquired the following month. On April 6, 20X1, your firm purchases a machine for $250,000 that management estimates will last 15 years and have a salvage value of $10,000. What is 20X1 depreciation expense?
  2. $32,000
  3. $24,000
  4. $33,333
  5. $25,000

2 points  

QUESTION 9

  1. On February 28, 20X1, your company purchases a machine for $150,000 with an estimated useful life of last 10 years and a salvage value of $10,000. Your company uses SYD depreciation and depreciates assets purchased between the 1st and 15th of the month for the entire month; assets purchased after the 15th of the month are treated as though they were acquired the following month. What is 20X1 depreciation expense?
  2. $22,727
  3. $25,455
  4. $27,273
  5. $21,212

2 points  

QUESTION 10

  1. Units of Production depreciation:
  2. is an appropriate method to use for buildings
  3. generally produces the same annual depreciation each year
  4. uses a different depreciation rate each year
  5. is based on how much an asset is used, regardless of how long it is owned
  6. is based on how long an asset is owned, regardless of how much it is used

2 points  

QUESTION 11

  1. On January 12, 20X1, your company purchases a machine for $125,000 with an estimated useful life of 15 years and a salvage of $5,000. Your company uses SYD depreciation and depreciates assets purchased between the 1st and 15th of the month for the entire month; assets purchased after the 15th of the month are treated as though they were acquired the following month. What is the machine’s book value at the end of 20X1?
  2. $109,375
  3. $110,000
  4. $111,250
  5. $110,677

2 points  

QUESTION 12

  1. For assets acquired during the year (i.e. not on January 1), the Units of Production method requires that depreciation is recorded for only a portion of the first year. To do this, the first year depreciation amount is prorated to reflect the amount of time that the asset was actually owned by the company (i.e. number of days or number of months).
  2.  True
  3.  False

2 points  

QUESTION 13

  1. On January 1, 20X1, ZipCo, which uses UOP depreciation, purchases a truck for $24,000 with an estimated useful life of 100,000 miles and a residual value of $4,000. Miles driven are as follows:
  2. Year
  3. Miles
  4. 20X1
  5. 20,000
  6. 20X2
  7. 15,000
  8. 20X3
  9. 10,000
  10. 20X4
  11. 25,000
  12. 20X5
  13. 30,000
  14. Depreciation expense for the truck is 20X1 is:
  15. $20,000
  16. $4,000
  17. $4,800
  18. $24,000

2 points  

QUESTION 14

  1. On January 1, 20X1, your company purchases for $550,000 a machine with an estimated useful life of 10 years and a salvage value of $50,000. Using SYD depreciation, the 20X2 depreciation expense is:
  2. $18,182
  3. $200,000
  4. $90,000
  5. $81,818

2 points  

QUESTION 15

  1. On May 1, 20X1, your company purchases a machine for $260,000 with an estimated useful life of 12 years and a salvage value of $10,000. Your company uses SYD depreciation and depreciates assets purchased between the 1st and 15th of the month for the entire month; assets purchased after the 15th of the month are treated as though they were acquired the following month. What is 20X2 depreciation expense?
  2. $36,667
  3. $35,256
  4. $34,872
  5. $36,325

2 points  

QUESTION 16

  1. Under the sum-of-the-years’ digits method:
  2. the denominator of the SYD fraction changes each year
  3. the book value remains the same each year
  4. less depreciation is taken in the early years of an asset’s life, and more in the later years
  5. more depreciation is taken in the early years of an asset’s life, and less is taken in later years

2 points  

QUESTION 17

  1. On July 8, 20X1, your company purchases a machine for $100,000. Your firm uses the DDB method. Assets purchased between the 1st and 15th of the month are depreciated for the entire month; assets purchased after the 15th of the month are treated as though acquired the following month. Management estimates the machine will last 8 years and have a salvage value of $35,000. The book value at the end of 20X1 is:
  2. $83,750
  3. $87,500
  4. $75,000
  5. $91,875

2 points  

QUESTION 18

  1. Under the double declining balance method:
  2. less depreciation is taken in the early years of an asset’s life, and more in the later years
  3. year 1 calculation is based on cost, not depreciable base
  4. the book value remains the same each year
  5. the depreciation rate changes each year
  6. all of the above

2 points  

QUESTION 19

  1. On May 1, 20X1, your company, which uses UOP depreciation, purchases a machine for $260,000. You estimate the machine will have a useful life of 2,520,000 units and a residual value of $10,000. In 20X1, the machine produces 100,000 units; in 20X2, it produces 120,000 units. What is the balance in Accumulated Depreciation at the end of 20X2?
  2. $11,905
  3. $12,381
  4. $22,698
  5. $21,825

2 points  

QUESTION 20

  1. On January 1, 20X1, your company purchases a machine for $500,000 with a useful life of 12 years and a salvage value of $25,000. If your company uses DDB depreciation, what is 20X4 expense?
  2. $47,839
  3. $45,428
  4. $45,814
  5. $48,225

2 points  

QUESTION 21

  1. For assets acquired during the year (i.e. not on January 1), the Declining Balance method requires that depreciation is recorded for only a portion of the first year. To do this, the first year depreciation amount is prorated to reflect the amount of time that the asset was actually owned by the company (i.e. number of days or number of months).
  2.  True
  3.  False

2 points  

QUESTION 22

  1. ABC Company purchased equipment on January 1 with an original cost of $50,000. Its estimated useful life is 5 years or 180,000 hours and the residual value is $5,000. Usage of the machine for each year is as follows:
  2. Year 1
  3. 42,000 hours
  4. Year 2
  5. 37,500 hours
  6. Year 3
  7. 39,000 hours
  8. Year 4
  9. 43,200 hours
  10. Year 5
  11. 31,000 hours
  12. Calculate depreciation for the first year using the Units of Production Method.
  13. $10,500
  14. $9,000
  15. $18,000
  16. $20,000
  17. $10,000

2 points  

QUESTION 23

  1. On November 17, 20X1, your company purchases a building for $500,000. Your company uses the DDB method. Assets purchased between the 1st and 15thof the month are depreciated for the entire month; assets purchased after the 15th of the month are treated as though acquired the following month. Management estimates the building will last 50 years and have a salvage value of $150,000. What is 20X1 depreciation expense?
  2. $20,000
  3. $14,000
  4. $1,667
  5. $1,167

2 points  

QUESTION 24

  1. A company that uses a calendar year purchases an asset with an estimated useful life of 8 years. If the asset is depreciated under the sum-of-the-years’ digits method, the depreciation rate for year 1 would be:
  2. 1/36
  3. 1/72
  4. 8/36
  5. 8/72
  6. 1/8

2 points  

QUESTION 25

  1. On January 22, 20X1, your company purchases a machine for $200,000. Your company uses 150% DB depreciation. Assets purchased between the 1st and 15th of the month are depreciated for the entire month; assets purchased after the 15th of the month are treated as though acquired the following month. Management estimates the machine will last 10 years and have a salvage value of $60,000. What is 20X1 depreciation expense?
  2. $30,000
  3. $19,250
  4. $21,000
  5. $27,500

2 points  

QUESTION 26

  1. Sum-of-the-years-digits depreciation:
  2. generally produces the same annual depreciation each year
  3. is based on how much an asset is used, regardless of how long it is owned
  4. is calculated using a different depreciable base each year
  5. uses a different depreciation rate each year

2 points  

QUESTION 27

  1. For assets acquired during the year (i.e. not on January 1), the sum-of-the-years’ digits method requires that the same depreciation rate be used:
  2. for the remaining months of the year of acquisition, then again in the final year of the asset’s estimated life for any months not depreciated in year 1
  3. for 12 consecutive months, even if that results in the same rate being used in two different calendar years
  4. throughout the life of the asset
  5. until the end of the calendar year, then recomputed for the next calendar year
  6. any of the above methods is acceptable, as long as the company uses the same method for every asset that it owns

2 points  

QUESTION 28

  1. On January 2, 20X1, Georgia Inc., which uses UOP depreciation, purchases a machine for $16,000; the company estimates that the machine will have a useful life of 15,000 machine hours and a salvage value of $1,000. You are given the following usage data:
  2. 20X1                                   3,000 hours
  3. 20X2                                   2,200 hours
  4. 20X3                                   6,170 hours
  5. 20X4                                   5,300 hours
  6. Depreciation expense on the machine for 20X4 is:
  7. $3,872
  8. $5,653
  9. $5,300
  10. $3,630
  11. $3,000

2 points  

QUESTION 29

  1. On July 1, 20X1, ZipCo, which uses UOP depreciation, purchases a truck for $36,000 with an estimated useful life of 100,000 miles and a residual value of $6,000. Miles driven are as follows:
  2. Year
  3. Miles
  4. 20X1
  5.  5,000
  6. 20X2
  7. 10,000
  8. 20X3
  9. 20,000
  10. 20X4
  11. 25,000
  12. 20X5
  13. 30,000
  14. The depreciation expense for 20X6:
  15. $750
  16. $3,000
  17. cannot be determined with the given data
  18. $3,600
  19. $900

2 points  

QUESTION 30

  1. On July 1, 20X1, ZipCo, which uses UOP depreciation, purchases a truck for $36,000 with an estimated useful life of 60,000 miles and a residual value of $6,000. Miles driven are as follows:
  2. Year
  3. Miles
  4. 20X1
  5.  5,000
  6. 20X2
  7. 10,000
  8. 20X3
  9. 20,000
  10. 20X4
  11. 25,000
  12. 20X5
  13. 30,000
  14. The book value of the truck on December 31, 20X3 is:
  15. $20,000
  16. $18,500
  17. $12,500
  18. $26,000

2 points  

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