J.R. Steakhouse purchases a commercial oven for $8,000, the 12th of March. The company depreciates assets purchased before the 15th as though the asset was purchased the 1st of the month.

The company uses straight-line depreciation. The residual value estimated is $800 and useful life of 6 years.

What is the depreciation expense for year 1, December 31?

		$900
		$1,111
		$1,200
		$1,000

On January 1, 20X1, Cayler Corp. purchases for $151,500 a machine with an estimated useful life of 3 years and a salvage value of $4,500.

Cayler uses straight-line depreciation.

What is the depreciation expense for 20X2?

What is the Book Value year-end 20X2?

		Accumulated Depreciation 20X2- $98,000 Book Value 20X2- $102,500
		Accumulated Depreciation 20X2- $98,000 Book Value 20X2- $102,500
		Accumulated Depreciation 20X2- $53,500 Book Value 20X2- $151,500
		Accumulated Depreciation 20X2- $98,000 Book Value 20X2- $53,500

Johnson Fabrics purchases equipment January 01, 20X4 for $12,000 that has a 5 year useful life and an estimated residual value of $0.

The depreciation rate using the DDB method for the company is ________.

		5%
		20%
		40%
		10%

Select all items which are correct.

		Land is listed on the depreciation schedule although it is not depreciated because it is an asset.
		Land is listed on the depreciation schedule because land is an asset depreciated- like buildings and equipment.
		Under both GAAP and tax law, depreciation of an asset begins when the asset has been acquired and placed in service.
		Under both GAAP and tax law, depreciation of an asset begins when the asset has been acquired- no matter if the asset has been placed in service.

The correct entry to record Building depreciation year end is _______________.

		Depreciation Expense- Building (debit) Accumulated Depreciation- Building (credit)
		Depreciation Expense- Building (debit) Building (credit)
		Accumulated Depreciation - Building (debit) Depreciation Expense- Building (credit)
		Depreciation Expense- Building (debit) Accumulated Depreciation- Building (credit) Building (credit)

Under MACRS the IRS (not the company) determines the asset's life (recovery periods).

True

False