1. On January 1, 20X1, PrimeCo, which uses the straight-line method, purchases a machine for $59,000 that it expects to last for 10 years; PrimeCo expects the machine to have a residual value of $8,000. What is the balance in the Accumulated Depreciation account at the end of 20X4?
2. $38,600
3. $15,300
4. $20,400
5. $23,600

2 points  

QUESTION 2

1. Which of the following statements about the accumulated depreciation account is correct?
2. It appears on the income statement and represents the total depreciation expense taken in all years to date.
3. It appears on the income statement and represents the total depreciation expense taken in the current year.
4. It appears on the balance sheet and represents the total depreciation expense taken in all years to date.
5. It appears on the balance sheet and represents the total depreciation expense taken in the current year.

2 points  

QUESTION 3

1. Net book value is a year-end estimate of the fair market value of a company's depreciable assets.
2.  True
3.  False

2 points  

QUESTION 4

1. DepCo uses the straight-line method. Assets purchased between the 1^st and 15^th of the month are depreciated for the entire month; assets purchased after the 15^th of the month are treated as though they were acquired the following month. On March 20, 20X1, DepCo purchases a printer for $9,000 that it expects to last for 5 years; DepCo expects the printer to have a residual value of $2,000. What is 20X2 depreciation expense for the printer?
2. $350
3. $450
4. $1,800
5. $1,400

2 points  

QUESTION 5

1. The cost of a plant asset is recognized as an expense:
2. in the period in which it is acquired.
3. when it is paid for.
4. in the period in which it is sold.
5. as it yields benefits to the company.

2 points  

QUESTION 6

1. Depreciation is:
2. the amount of cash that a company sets aside to replace a fixed asset
3. a system of allocating the cost of a fixed asset over its useful life
4. the decrease in market value of a fixed asset
5. all of the above

2 points  

QUESTION 7

1. An asset cost $50,000 and has a useful life of 5 years. At the end of year two, the asset's accumulated depreciation account has a balance of $18,000. The $32,000 difference between the cost and the accumulated depreciation is referred to as :
2. depreciable base
3. net realizable value
4. book value
5. residual value

2 points  

QUESTION 8

1. ZyCo uses the straight-line method. Assets purchased between the 1^st and 15^th of the month are depreciated for the entire month; assets purchased after the 15^th of the month are treated as though they were acquired the following month. On May 2, 20X1, ZyCo purchases furniture for $35,000 that it expects to last for 10 years; ZyCo expects the furniture to have a residual value of $3,000. What is the book value at the end of 20X3?
2. $25,400
3. $26,467
4. $23,467
5. $22,400
6. $25,667
7. $24,500

2 points  

QUESTION 9

1. The adjusting entry needed to record depreciation for equipment for the period would:
2. debit Accumulated Depreciation; credit Depreciation Expense
3. debit Depreciation Expense; credit Accumulated Depreciation
4.  
5. 
   
6.  
7.  
8. debit Accumulated Depreciation; credit Equipment
9. debit Equipment; credit Accumulated Depreciation
10. debit Depreciation Expense; credit Equipment

2 points  

QUESTION 10

1. On January 1, 20X1, your company, which uses the straight-line method, purchases 3 machines, recorded as follows: 
2.                                          
3.  CostSalvage 
4. ValueUseful 
5. LifeMachine #1     $6,000       $1,000    5 years  Machine #2     $6,000       $1,000    10 years  Machine #3     $11,000       $1,000    10 years  
6. What is total 20X1 depreciation for the 3 machines?
7. $2,500
8. $5,000
9. $1,250
10. $2,900

2 points  

QUESTION 11

1. Regardless of the GAAP depreciation method selected:
2. the balance sheet shows the acquisition cost and the accumulated depreciation of each asset in the same way
3. the total accumulated depreciation at the end of the asset's life will equal the original cost minus residual value
4. the total amount of depreciation taken over the useful life of the asset will be the same
5. the book value at the end of the asset's useful life will be the residual value
6. all of the above
7.  
8.  

2 points  

QUESTION 12

1. On January 1, 20X1, PrimeCo, which uses the straight-line method, purchases a machine for $59,000 that it expects to last for 10 years; PrimeCo expects the machine to have a residual value of $8,000. What is the annual depreciation rate?
2. 8.6%
3. 20%
4. 10%
5. 13.6%
6. 86.4%

2 points  

QUESTION 13

1. On which of the following accounts do we normally not record depreciation?
2. inventory
3. equipment
4. furniture
5. building
6. all of these accounts would be depreciated

2 points  

QUESTION 14

1. RayCo uses the straight-line method. Assets purchased between the 1^st and 15^th of the month are depreciated for the entire month; assets purchased after the 15^th of the month are treated as though they were acquired the following month. On May 12, 20X1, RayCo purchases furniture for $25,000 that it expects to last for 10 years; RayCo expects the furniture to have a residual value of $1,000. What is 20X1 depreciation expense for the furniture?
2. $1,600
3. $1,667
4. $2,400
5. $2,500
6. $1,458
7. $1,400

2 points  

QUESTION 15

1. MyCo uses the straight-line method. Assets purchased between the 1^st and 15^th of the month are depreciated for the entire month; assets purchased after the 15^th of the month are treated as though they were acquired the following month. On April 22, 20X1, MyCo purchases equipment for $50,000 that it expects to last for 5 years; MyCo expects the equipment to have a residual value of $5,000. What is 20X6 depreciation expense for the equipment?
2. $3,000
3. $0
4. $9,000
5. $6,750
6. $6,000
7. $2,250

2 points  

QUESTION 16

1. On January 1, 20X1, PrimeCo, which uses the straight-line method, purchases a machine for $59,000 that it expects to last for 10 years; PrimeCo expects the machine to have a residual value of $8,000. What is the machine's book value at the end of 20X3?
2. $15,300
3. $33,700
4. $43,700
5. $41,300
6. $31,300
7. $17,700

2 points  

QUESTION 17

1. To be depreciable, assets generally:
2. must have a useful life greater than 1 year
3. must be tangible
4. cannot be held for resale
5. cannot be held for investment purposes
6. must meet all of the above conditions

2 points  

QUESTION 18

1. DepCo uses the straight-line method. Assets purchased between the 1^st and 15^th of the month are depreciated for the entire month; assets purchased after the 15^th of the month are treated as though they were acquired the following month. On March 20, 20X1, DepCo purchases a printer for $9,000 that it expects to last for 5 years; DepCo expects the printer to have a residual value of $2,000. What is 20X1 depreciation expense for the printer?
2. $1,400
3. $1,050
4. $1,800
5. $1,167
6. $1,500
7. $1,350

2 points  

QUESTION 19

1. GAAP depreciation is based on estimates of salvage value and useful life. Once determined, those values (and the depreciation calculations based on them) cannot be changed.
2.  True
3.  False

2 points  

QUESTION 20

1. Your firm purchases equipment and you are given the following data:

•         Cost                                               $10,000
•         Sales tax                                               700
•         Delivery cost                                        100
•         Installation cost                                      75

1. For what amount do you debit the Equipment account?
2. $10,775
3. $10,800
4. $10,000
5. $10,875
6.  
7. $10,700

2 points  

QUESTION 21

1. Which of the following statements about the depreciation expense account is correct?
2. It appears on the balance sheet and represents the total depreciation expense taken in the current year.
3. It appears on the income statement and represents the total depreciation expense taken in the current year.
4. It appears on the balance sheet and represents the total depreciation expense taken in all years to date.
5. It appears on the income statement and represents the total depreciation expense taken in all years to date.
6.  

2 points  

QUESTION 22

1. To calculate depreciation using GAAP rules, you must determine which of the following attributes for the asset?
2.  
3. I
4. Cost Basis
5. II
6. Residual Value
7. III
8. Estimated Life
9. IV
10. Depreciation Method
11. V
12. Book Value
13. II, III, IV
14. I, III, IV, V
15. I, II, IV, V
16. I, III, IV
17. I, II, III, IV 
18.  
19.  

2 points  

QUESTION 23

1. On July 1, 20X1, your company, which uses the straight-line method, purchases 3 machines, as follows:
2.        
3.  CostSalvage 
4. ValueUseful 
5. LifeMachine #1  $80,000    $14,000    12 years  Machine #2  $55,000    $10,000    8 years  Machine #3  $27,000    $3,000    5 years  
6. Assets purchased between the 1^st and 15^th of the month are depreciated for the entire month; assets purchased after the 15^th of the month are treated as though they were acquired the following month. What is total 20X4 depreciation for the 3 machines?
7. $9,471
8. $15,925
9. $18,942
10. $7,963

2 points  

QUESTION 24

1. On July 1, 20X1, your company, which uses the straight-line method, purchases 3 machines, as follows:
2.        
3.  CostSalvage 
4. ValueUseful 
5. LifeMachine #1  $80,000     $14,000    12 years  Machine #2  $55,000    $10,000   8 years  Machine #3  $27,000    $3,000    5 years  
6. Assets purchased between the 1^st and 15^th of the month are depreciated for the entire month; assets purchased after the 15^th of the month are treated as though they were acquired the following month. What is total 20X1 depreciation for the 3 machines?
7. $9,471
8. $18,942
9. $7,963
10. $15,925

2 points  

QUESTION 25

1. Straight Line depreciation generally results in equal amounts of depreciation in each year.
2.  True
3.  False

2 points  

QUESTION 26

1. Under the current rules, land is:
2. not depreciated for financial statement purposes (GAAP), but is depreciated for tax purposesdepreciated for financial statement purposes (GAAP), but is not depreciated for tax purposesdepreciated for both financial statement purposes (GAAP) and for tax purposesnot depreciated for financial statement purposes (GAAP) or for tax purposes
3.  
4.  

2 points  

QUESTION 27

1. DepCo uses the straight-line method. Assets purchased between the 1^st and 15^th of the month are depreciated for the entire month; assets purchased after the 15^th of the month are treated as though they were acquired the following month. On March 20, 20X1, DepCo purchases a printer for $9,000 that it expects to last for 5 years; DepCo expects the printer to have a residual value of $2,000. What is the balance in DepCo's Accumulated Depreciation account as of Dec. 31, 20X3?
2. $4,200
3. $3,850
4. $4,950
5. $5,400

2 points  

QUESTION 28

1. A tract of land costs $200,000. The estimated residual value is $50,000, and it is estimated to have a useful life of 10 years. If the company uses straight-line depreciation, the depreciation expense for year 1 is.
2. $5,000
3. $20,000
4. $15,000
5. $0

2 points  

QUESTION 29

1. RayCo uses the straight-line method. Assets purchased between the 1^st and 15^th of the month are depreciated for the entire month; assets purchased after the 15^th of the month are treated as though they were acquired the following month. On May 12, 20X1, RayCo purchases furniture for $25,000 that it expects to last for 10 years; RayCo expects the furniture to have a residual value of $1,000. What is 20X2 depreciation expense for the furniture?
2. $2,400
3. $2,500
4. $1,600
5. $1,400
6. $1,458
7. $1,667

2 points  

QUESTION 30

1. A company purchased property for $105,000. The property included a building, a parking lot, and land. The building was appraised at $62,000; the land at $45,000; and the parking lot at $18,000. What value(s) should be used to record the cost of the asset(s) in the accounting records?
2. Property = $125,000 ( no need to allocate separately for each asset)
3. Building = $52,080; Land = $37,800; Parking Lot = $15,120
4. Property = $105,000 (no need to allocate separately for each asset)
5. Building = $62,000; Land = $45,000; Parking Lot = $18,000
6. Building = $35,000; Land = $35,000; Parking Lot = $35,000