Multiple Choice Questions
1. A method that excludes residual value from the depreciation base for the calculation of depreciation is:
a. Straight- line
b. Sum- of- the- years€™- digits
c. Double- declining- balance
d. Activity
2. Vorst depreciates Asset A on the double- declining-balance method. How much depreciation expense should Vorst record in 2017 for Asset A?
a. $ 32,000
b. $ 25,600
c. $ 14,400
d. $ 6,400

3. Using the sum- of- the- years€™- digits method, how much depreciation expense should Vorst record in 2017 for Asset B?
a. $ 6,000
b. $ 9,000
c. $ 11,000
d. $ 12,000
4. Vorst depreciates Asset C by the straight- line method. On June 30, 2017, Vorst sold Asset C for $ 28,000 cash. How much gain (loss) should Vorst record in 2017 on the disposal of Asset C?
a. $ 2,800
b. ($ 2,800)
c. ($ 5,600)
d. ($ 8,400)
5. A machine with a 4- year estimated useful life and an estimated 15% residual value was acquired on January 1. Would depreciation expense using the sum-of- the- years€™- digits method be higher or lower than depreciation expense using the double- declining-balance method in the first and second years?

6. At the end of the expected useful life of a depreciable asset with an estimated 15% residual value, the accumulated depreciation would equal the original cost of the asset under which of the following depreciation methods?

7. The composite depreciation method:
a. Is applied to a group of homogeneous
b. Is an accelerated method of depreciation
c. Does not recognize gain or loss on the retirement of single assets in the group
d. Excludes residual value from the base of the depreciation calculation
8. On July 1, 2015, Mundo Corporation purchased factory equipment for $ 50,000. Residual value was estimated at $ 2,000. The equipment will be depreciated over 10 years using the double- declining-balance method. Counting the year of acquisition as one- half year, Mundo should record 2016 depreciation expense of:
a. $ 7,680
b. $ 9,000
c. $ 9,600
d. $ 10,000
9. A fixed asset with a 5- year estimated useful life is sold during the second year. How would the use of the straight- line method of depreciation instead of the double- declining- balance method of depreciation affect the amount of gain or loss on the sale of the fixed asset??

10. Crowder Company acquired a tract of land containing an extractable natural resource. Crowder is required by the purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 5,000,000 tons and that the land will have a value of $ 1,000,000 after restoration. Relevant cost information follows: Land $ 9,000,000 Estimated restoration costs 1,500,000 If Crowder maintains no inventories of extracted material, what should be the depletion per ton of extracted material?
a. $ 2.10
b. $ 1.90
c. $ 1.80
d. $ 1.60

Accumulated Aqisition Residual Asset Cost Depreciation Date Value $100,000 64,000 36,000 33,600 $225,000 $133,600 2015 $20,000 10,000 14,000 $44,000 55,000 0,000 2014 2014 First Year Second Year a. Higher b. Higher c. Lower Higher Lower LowerHigher Lower Straight-Line Sumof-the-Years-Digits a. b. C. d. Yes No Yes No Yes No No Yes Gain Loss a. No effect b. No effect c. Decrease d. Increase No effect Increase Increase Decrease