1, ABC Inc. has a machine that, as of December 31, 2018, has the following information: Cost: $10,800; Residual value: $1,800; Age: 2 years; Accumulated depreciation $6,000. Which of the following statements is correct?

	a.	The useful life of the machine is 6 years. The annual depreciation is $1,500.
	b.	The useful life of the machine is 3 years. The annual depreciation is $3,000.
	c.	The useful life of the machine is 6 years. The annual depreciation is $3,000.
	d.	The useful life of the machine is 3 years. The annual depreciation is $1,500.

2.

Which of the following statements is false about the asset Goodwill?

	a.	It only occurs when one company buys another company.
	b.	The value of goodwill is the amount by which the purchase price exceeds the fair market value of the net assets acquired.
	c.	It represents the amount paid to the employees of the acquired company in exchange for the commitment not to leave the firm.
	d.	It is not amortized over the useful life of the asset.

3.

Question 3

DEF Inc. has the following information as of December 31, 2018:

Cost of property and equipment (12/31/2017): $5,000

Accumulated depreciation (12/31/2017): $3,000

Cost of property and equipment (12/31/2018): $7,000

Accumulated depreciation (12/31/2018): $4,000

Capital expenditures in 2018: $4,000

There were no disposals of PP&E in 2018

Which of the following statements is correct?

	a.	Depreciation expense in 2018 was $1,000.
	b.	PP&E impairment loss in 2018 was $2,000.
	c.	(a) and (b) are correct.
	d.	None of the above are correct.

4.

At the end of the fiscal year, Walter white Inc. had a machine with a cost of $1,000 and accumulated depreciation of $600. The estimated future cash flows from the machine is $350, and the fair value of the machine is $300. The net book value of the machine after considering impairment is:

	a.	$400.
	b.	$300.
	c.	$350.
	d.	$600.

5.

Which of the following statements is correct?

	a.	The net asset value of PP&E will always be lower under the double-declining-balance depreciation method relative to the straight-line depreciation method.
	b.	The depreciation expense under the double-declining-balance depreciation method will always be lower than the depreciation expense under the straight-line depreciation method.
	c.	The depreciation expense under the double-declining-balance depreciation method will always exceed the depreciation expense under the straight-line depreciation method.
	d.	The net asset value of PP&E under the double-declining-balance depreciation method will never be higher the net asset value under the straight-line depreciation method.