12) On January 1, Year 1, Sanderson, Inc. bought a machine with an estimated useful life of five years for $1,100,000. Residual value at the end of five years is estimated to be $54,000. What is the book value of the machine at the end of Year 2 if the firm uses straight-line depreciation? A) $660,000 B) $681,600 C) $627,600 D) $659,996 13) Which depreciation method does the IRS require for tax purposes? A) Units-of-production method B) Straight-line method C) Double-declining-balance method D) Modified accelerated cost recovery system 14) A firm buys an asset on January 9, Year 1 and uses the modified half-month convention. How many months is the asset depreciated in Year 1? A) 2 months B) 11 months C) 12 months D) 1 month 15) A photocopier cost $102,000 and has $92,000 of accumulated depreciation. If the firm discards this plant asset, the result is: A) A loss of $10,000 B) A loss of $92,000 C) A gain of $10,000 D) No gain or loss 16) When a plant asset is sold, which of these values is compared to the market value of that asset to determine the gain or loss on the sale? A) Book value B) Residual value C) Original cost D) Salvage value