Question

Question 6

What type of depreciation occurs when an asset can no longer provide services at the level originally intended?

Select one:

a.Physical depreciation

b.Market depreciation

c.Cost depreciation

d.Functional depreciation

Question 7

Which method of depreciation considers residual value in computing the normal periodic depreciation?

Select one:

a. Straight-line

b. MACRS

c. Declining balance

d. All the above use residual value

Question 8

The accounting term depreciation measures __________.

Select one:

a. An assets market value decline

b. The amount of cash a company sets aside for asset replacement

c. The amount of asset cost allocated to expense over periods benefited

d. Anticipated losses if sold in the used market

Question 9

Accelerated depreciation is primarily used for __________.

Select one:

a. The financial statements of large companies

b. The financial statements of small companies

c. Income tax purposes

d. Both financial reporting and income taxes by most companies

Question 10

To measure depreciation, all of the following most be known EXCEPT __________.

Select one:

a. Market value

b. Residual value

c. Historical cost

d. Estimated life

Question 11

Equipment was purchased for $32,000. It has a useful life of 5 years and a residual value of $4,000. What is depreciation expense for year two under the double declining balance method?

Select one:

a. $5,600

b. $6,720

c. $7,680

d. $12,800

Question 12

On September 1, a machine with a useful life of 8 years and a residual value of $5,000 was purchased for $47,000. What is depreciation expense in the year of purchase under straight-line depreciation assuming a December 31 year end?

Select one:

a. $5,250

b. $5,875

c. $1,750

d. $1,958

Answer 1

Question 6 - "d - Functional depreciation"

Question 7 - " a - Straight-line Method of Depreciation"

Question 8 - " c - The amount of asset cost allocated to expense over periods benefited"

Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life.Systematic allocation means that the depreciation is charged according to a consistent policy and method.

Question 9 - " Accelerated depreciation is primarily used for " Income Tax Purposes "

Question 10 - " a - Market Value "

Question 11 - " Depreciation expense for year two under the double declining balance method = $7,680"

For year 1 = $32000 x 2 x 0.20 = $12800

For Year 2 = ( $32000 - 12800 ) x 2 x 0.20 = $7680

Question 12 - " Depreciation expense in the year of purchase under straight-line depreciation = $,1750

Depreciation per year =($47000 - $5000 ) / 8 Years = $5250

Depreciation expense in the year of purchase = $5250 x 4/12 =$1,750