True or False(T/F):

1. The depreciation method using a fixed rate applied to the book value of the asset each year, resulting in successively smaller depreciation charges as the undepreciated cost diminishes year by year, is called the declining balance method.
2. In accounting for exchanges of similar assets considered to have "commercial substance," financial accounting recognizes all gains and losses.
3. A trade-in allowance cannot be greater than the book value of the asset traded.

Under the Modified Accelerated Cost Recovery System (MACRS) depreciation method, the salvage value is

A. added to the cost of the asset.

B. ignored.

C. subtracted from the cost of the asset.

D. added to the straight-line depreciation.

The depreciation method that estimates the number of units of service or output that can be provided by an asset and allocates the depreciable cost of the asset on the basis of the use or output during each period is called the

A. declining-balance method.

B. sum-of-the-years'-digit method.

C. units-of-production method.

D. straight-line method.