1.Attack Company buys a factory for $9,000,000 on Jan 1 2004 with an estimated life of 30 years and no salvage value and depreciates the building using the straight line method. On January 1, 2006 it adds a $1,000,000 addition to the building. On January 1, 2007 it revises the estimated life remaining to be 15 years. Attack always rounds its annual depreciation provision to the nearest dollar. The fiscal year end is December 31. Based on the information given, Attack's depreciation recorded in 2007 would be:

$444,368

None of the above

$562,820

$604,286

$355,666

2.If the accountant for Forgetful Corporation forgets to record depreciation in 2010 then:

both assets and expenses will be overstated in 2010

none of the above

there is no error in the 2010 financials since the understatement of depreciation expense corresponds to the overstatement of accumulated depreciation

this will be caught and corrected before actual preparation of the financial statements since the trial balance will be out of balance

the error will have a two year counterbalancing effect and retained earnings will be correctly stated at the end of 2011.

3.On August 1, 2015, Toy Inc. purchased a new piece of equipment that cost $25000. The estimated useful life is five years and the estimated residual value is $ 2,500. During the five years of useful life the equipment is expected to produce 10,000 units.

If Toy Inc. uses the straight line method of depreciation and sells the equipment for $ 9,500 on August 1st, 2018. What will be the realized gain (loss)?

$ 13,500

$ (9,000)

None of the other alternatives are correct

($ 2,000)

$1,500

4.Which of the following is true with regards to change in depreciation method used by a company?

A company cannot change the depreciation method used mid-way through a capital asset's life.

None of the other alternatives are correct

A change in depreciation method is accounted for retroactively.

A change in depreciation method is accounted for prospectively.

A company can change the depreciation method used for a capital asset every year during the asset's useful life and this is not problematic at all.

5.Tiki Company has a building that cost $2,000,000 new and is 50% depreciated. The market value of the building is $3,000,000 at year end. Tiki will show on its year end balance sheet

None of the above

The building at net book value

The building at both cost and net book value

The building at cost

The building at market