Question: D. Multiple Choice Instructions: Put the best answer for each of the following questions in the blank. 1. The depreciation method that would provide the
| D. Multiple Choice | |||||||||
| Instructions: Put the best answer for each of the following questions in the blank. | |||||||||
| 1. The depreciation method that would provide the highest reported income in the early years | |||||||||
| of an asset's life would be: | |||||||||
| a. straight-line | |||||||||
| b. declining-balance | |||||||||
| c. 150% straight-line | |||||||||
| d. accelerated | |||||||||
| 2. Equipment with an estimated useful life of 5 years and an estimated residual value of $1,000 is | |||||||||
| acquired at a cost of $15,000. Using the declining balance method (at twice the straight-line rate), | |||||||||
| what is the amount of depreciation for the first year of use of the equipment? | |||||||||
| a. $2,600 | |||||||||
| b. $3,000 | |||||||||
| c. $5,600 | |||||||||
| d. $6,000 | |||||||||
| 3. Equipment that cost $20,000 is estimated to have a useful life of 5 years and a | |||||||||
| residual value of $2,000. The equipment has been depreciated for 2 years using straight-line | |||||||||
| depreciation. The depreciation expense on the equipment in year 3 using the | |||||||||
| straight-line method would be: | |||||||||
| a. $3,600 | |||||||||
| b. $5,900 | |||||||||
| c. $6,000 | |||||||||
| d. $7,500 | |||||||||
| 4. The depreciation method used most often in the financial statements is the: | |||||||||
| a. straight-line method | |||||||||
| b. declining-balance method | |||||||||
| c. units-of-production method | |||||||||
| d. MACRS method | |||||||||
| 5. Old equipment which cost $11,000 and has accumulated depreciation of $6,300 is | |||||||||
| given, along with $9,000 in cash, for the same type of new equipment with a price of $15,600. | |||||||||
| At what amount should the new equipment be recorded? | |||||||||
| a. $15,600 | |||||||||
| b. $15,300 | |||||||||
| c. $13,700 | |||||||||
| d. $9,000 | |||||||||
| 6. Assume the same facts as in No. 5, except that the old equipment and $11,500 in cash is | |||||||||
| given for the new equipment. At what amount should the new equipment be recorded for | |||||||||
| financial accounting purposes? | |||||||||
| a. $16,200 | |||||||||
| b. $15,600 | |||||||||
| c. $11,500 | |||||||||
| d. $10,900 | |||||||||
| 7. In a lease contract, the party who legally owns the asset is the: | |||||||||
| a. contractor | |||||||||
| b. operator | |||||||||
| c. lessee | |||||||||
| d. lessor | |||||||||
| 8. Which of the following items would not be considered an intangible asset? | |||||||||
| a. mineral ore deposits | |||||||||
| b. patent | |||||||||
| c. copyright | |||||||||
| d. goodwill | |||||||||
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