Question

Which depreciation method is most frequently used in businesses today?

Straight-line

Declining-balance

Units-of-activity

Double-declining-balance

Sargent Corporation bought equipment on January 1, 2017. The equipment cost $130,000 and had an expected salvage value of $10,000. The life of the equipment was estimated to be 6 years. The total depreciable cost of the equipment is

$120,000.

$130,000.

$140,000.

$10,000.

Sargent Corporation bought equipment on January 1, 2017. The equipment cost $130,000 and had an expected salvage value of $10,000. The life of the equipment was estimated to be 6 years. The depreciation expense for the first year (2017) using the straight-line method of depreciation is

$10,000.

$20,000.

$21,667.

$23,333.

Equipment that cost $200,000 and on which $100,000 of accumulated depreciation has been recorded was disposed of for $90,000 cash. The entry to record this event would include

a. a loss of $10,000.

b a gain of $10,000.

c a credit to the Equipment account for $90,000.

d a credit to Accumulated Depreciation for $90,000.

The method most commonly used to compute depletion is the

straight-line method.

double-declining-balance method.

units-of-activity method.

effective interest method.

Answer 1

1) Which depreciation method is most frequently used in businesses today

So answer is a) Straight line

2) Sargent Corporation bought equipment on January 1, 2017. The equipment cost $130,000 and had an expected salvage value of $10,000. The life of the equipment was estimated to be 6 years. The total depreciable cost of the equipment is

Depreciable cost of equipment = (130000-10000) = $120000

So answer is a) $120000

3) Sargent Corporation bought equipment on January 1, 2017. The equipment cost $130,000 and had an expected salvage value of $10,000. The life of the equipment was estimated to be 6 years. The depreciation expense for the first year (2017) using the straight-line method of depreciation is

First year dep = 120000/6 = 20000

So answer is b) $20000

4) Equipment that cost $200,000 and on which $100,000 of accumulated depreciation has been recorded was disposed of for $90,000 cash. The entry to record this event would include

Cash	90000
Accumlated dep	100000
Loss	10000
Equipment		2000000

So answer is a) a loss of $10000

5) The method most commonly used to compute depletion is the

SO answer is c) units-of-activity method.