Q1

If the cost of a major service on a motor vehicle, which did not increase the vehicles' useful life was incorrectly capitalised and added to the carrying amount of the vehicle rather than being expensed, expenses would be: Group of answer choices

cause for an adjustment to prior years' depreciation on the equipment.

treated as an expense.

added to the carrying amount of the asset causing future depreciation to be increased. charged to a separate asset account and depreciated over five years.

Q2

Myster Co purchased equipment for $25 000. Originally it had an estimated useful life of 4 years and a residual value of $5000. At the beginning of the 4th year of the equipment's life the estimated useful life was extended by a further three years and the residual value was reduced to zero. Myster Co uses the straight-line method to depreciate its equipment. At the end of year 4, how much depreciation should be recorded for the computer? Group of answer choices

$4 000

$1 250

$5 000

$2 500