FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 11: Depreciation, Depletion, Impairment, and Disposal

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

Lucas, Inc. purchased ten air conditioning units for $5,000 each, with an average expected service life of eight years and a residual value of $700 each. The depreciation rate for the assets, assuming the group depreciation method is used, will be

A) 10%
B) 10.75%
C) 12.5%
D) 14.5%

E) B) and C)
F) None of the above

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

Which depreciation method calculates annual depreciation expense based on the book value of an asset?

A) double-declining-balance method
B) sum-of-the-years'-digits method
C) inventory systems method
D) group method

E) All of the above
F) A) and B)

Correct Answer

verified

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

On July 1, 2014, American Stereo purchased stereo equipment for $5,000. The estimated life of the equipment was ten years and the residual value was estimated to be $2,000. Double-declining-balance depreciation was used. If calculations are based on the nearest whole month, depreciation expense for the year 2016 was

Hill has a fiscal year-end of December 31. Hill purchased a piece of equipment for $12,000 in February with a four-year useful life and a zero residual value. Hill used the equipment to produce finished goods in March that were sold on credit in April with cash collected in May. Hill uses straight-line depreciation. The amount of depreciation expense affecting the reported income on the first quarter income statement was

Making intercompany comparisions is equally as important to insiders as well as outsiders. What two measures can provide investors and analysts with information regarding a companies property, plant, and equipment?

When deciding on a depreciation method repair and maintenance costs associated with the asset should be a considering factor to ensure that the total costs are reported accurately in the financial statements.

Which one of the following statements is not a disclosure requirement for depreciation?

On April 20, 2014, Maskell Co. purchased an asset costing $66,000 with a useful life of nine years and a residual value of $6,000. The company uses sum-of-the-years'-digits depreciation. Required: Compute depreciation expense for 2014 using the a.nearest whole month method b.nearest whole year method c.half-year convention method

Peanut Company purchased a machine on January 1, 2014, for $100,000 with a $20,000 salvage value and a eight-year useful life. The company uses double-declining-balance depreciation. Required: Compute the depreciation expense (to the nearest whole dollar) for 2014 and 2015.

Which one of the following statements is true?

If a company purchases an asset within the last 6 months of the year, it is considered owned for the entire year based upon the nearest whole year convention.

On January 1, 2014, Danville Corporation acquired a machine at a cost of $60,000. The machine's service life was estimated to be ten years and its residual value to be $6,000. The straight-line method was used for depreciation. On January 1, 2019, the machine was no longer useful and was sold for $3,000. For 2019, in regard to this machine, how much of a loss should Danville record?

On January 1, 2014, Paradise Hotels and Spa's purchased a machine. Residual value was estimated to be $13,000 after a 15-year life. Using sum-of-the-years'-digits depreciation, the company recorded $8,500 depreciation expense in 2016. Required: Compute the cost of the machine.

On January 1, 2014, Mullhausen Co. began using the composite depreciation method. There were three machines to consider, as follows: At the end of the second year, Machine B was sold for $8,200. In the entry to record the sale, there should be a

Which one of the following statements is true?

How can service life be measured?

The Chuck Company purchased a truck on January 1, 2014. The truck cost $106,000 and was expected to have a residual value of $14,000 at the end of 2018. Chuck uses the 150%-declining-balance depreciation method. What amount of depreciation should Chuck record on the truck in 2014?

Exhibit 11-2 Browning purchased a business copier for $4,500 on August 3, 2014. It has an estimated residual value of $500 and an expected service life of five years. Browning uses double-declining-balance depreciation computed to the nearest whole month. -Refer to Exhibit 11-2. The accumulated depreciation balance at December 31, 2015, should be

The purpose of depreciation is to systematically and rationally depreciate the cost over the life of the asset to ensure appropriate capital for future replacement.

Redeau Company has been depreciating certain assets using the straight-line method. At the beginning of the current year, the company changed to the sum-of-the-years'-digits method to depreciate these assets. Which of the following statements regarding this change is true?