DEPRECIATION CONCEPTS Depreciation of a plant asset is the process of 1. A. Asset valuation for statement of financial position purposes. B. Allocation of the asset's cost to the periods of use. C. Fund accumulation for the replacement of the asset. D. Asset valuation based on current replacement cost data. 2, A depreciable asset has an estimated 15% salvage value. At the end of its estimated useful life, the accumulated depreciation will equal the original cost of the asset under which of the following depreciation methods? Straight-Line Productive-Output A. B. C. Yes Yes No No No Yes Yes No 3. Depreciation expense is computed on the original cost minus estimated salvage value under which of the following depreciation methods? Double-Declining Productive-Output A. B. C. D. No No Yes Yes No Yes Yes No A machine with a 5-year estimated useful life and an estimated 10% salvage value was acquired on January 1, 2006. On December 31, 2009, accumulated depreciation using the sum-of-the-years' digits method is 4, A. (Original cost-salvage value) multiplied by (1/15) B. (Original cost - salvage value) multiplied by (14/15) C. Original cost multiplied by (14/15) D. Original cost multiplied by (1/15) Under which of the following depreciation methods is it possible for depreciation expense to be higher in the later years of an asset's useful life? 5. A. Straight-line B. Activity method based on units of production C. Sum-of-the-years' digits D. Declining balance 6. Caracos Corp. purchased a computer on January 1 for $108,000. It was estimated to have a 4-year useful life and a salvage value of $18,000. The double-declining- balance method is to be used. The amount of depreciation to be reported at the end of the first year is A. ($108,000-$18,000)(25% x 2) B. ($108,000-$18,000(25% x1/2) C. ($108,000)(25% x 2) D. ($108,000)(25%) 7. On the first day of its current fiscal year, Santiago Corporation purchased equipment costing $400,000 with a salvage value of $80,000. Depreciation expense for the year was $160,000. If Santiago uses the double-declining- balance method of depreciation, what is the estimated useful life of an asset? A. 5 B. 4 C. 2.5 D. 2