Question

1-An asset leased under an operating lease will appear on the balance sheet as a long-term asset.

True

False

2-A tangible asset is one that lacks physical existence.

True

False

3-The units-of-activity depreciation method provides a good match of expenses against revenue.

True

False

4-A machine with a cost of $180,000 has an estimated residual value of $18,000 and an estimated life of 3 years or 18,000 hours. It is to be depreciated by the units-of-activity method. What is the amount of depreciation for the second full year, during which the machine was used 5,500 hours?

a.$5,500

b.$49,500

c.$31,500

d.$60,500

Answer 1

Question 1

Answer---False

Question 2

Answer---False

A tangible asset can be seen and touched and hence it does have a physical existence.

Question 3

Answer---True

Units of activity method of depreciation is the method which provides for depreciation expenses for the period on the basis of actual usage of he asset. Such depreciation on the basis of units produced by asset in case of a machine or miles driven in case of a vehicle.

Question 4

Answer---$49,500

Units of Production method
A	Cost	$   180,000.00
B	Residual Value	$     18,000.00
C=A - B	Depreciable base	$   162,000.00
D	Usage in units(in Miles)	18000
E	Depreciation per Mile	$                9.00

	Book Value	Usage	Depreciation expense	Ending Book Value	Accumulated Depreciation
Second year	$      180,000.00	5500	$   49,500.00	$     130,500.00	$      49,500.00