1. The straight line method allows a business to calculate an equal amount of depreciation expense for each year of service anticipated.

True or False

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2. The units-of-production method is useful when the utilization of an asset is fixed.

True or False

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3. The Modified Accelerated Cost Recovery System (MACRS) is a system of tax schedules established by the Federal Reserve System.

True or False

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4.The double-declining-balance method calculates depreciation on an asset at double the rate used in the:

a.the computation of interest payment on loan availed to buy the asset.

b.units-of-production method of depreciation.

c.Modified Accelerated Cost Recovery System (MACRS).

d.straight-line method of depreciation.

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5. The _____ is an accelerated method of depreciation that allows larger amounts of depreciation to be taken in the early years of an asset's life.

a.straight-line method

b.Modified Accelerated Cost Recovery System (MACRS)

c.double-declining-balance method

d.payback-recovery system

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6. Which of the following is true of the double-declining-balance method?

a.The method takes larger amounts of depreciation during the later years of an asset's life.

b.The method considers the trade-in value of an asset at the beginning of the depreciation schedule.

c.The method calculates depreciation at double the straight-line rate of depreciation.

d.The method adds the salvage value of an asset to its accumulated depreciation to compute its book value.

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7. A water pump that costs $25,000 is depreciated using the double-declining-balance method. Which of the following is the depreciation expense for Year 1 if the depreciation rate as per straight-line method is 20%?

a.$20,000

b.$10,000

c.$9,000

d.$5,000

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8. The _____ is a combination of the declining-balance and straight-line depreciation methods of computing depreciation.

a.cost of goods sold method

b.trade-in value recovery system

c.double-declining-balance method

d.Modified Accelerated Cost Recovery System (MACRS)

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9. Which of the following statements is true of the Modified Accelerated Cost Recovery System (MACRS)?

a.The system provides a variety of tax rate schedules established by the Internal Revenue Service.

b.The system considers the trade-in value of an asset to calculate depreciation expense over the useful life of an asset.

c.The system allows a business to calculate an equal amount of depreciation expense for each year of service anticipated.

d.The system is used only by large business groups for financial statement reporting and tax reporting.