Q28) A calendar year company acquired a machine on Jan. 1, which has an expected useful life of 5 years and a depreciable cost of $8,000 which reflects a salvage value that is 20% of cost.

What is the depreciation expense in year 2 if the 150-declining-balance method is used?

1. The purchase price for a land and building combined was $168,000. Appraisals indicate respective values of $30,000 and $150,000. The cost allocated to the land and building, respectively, should be (NOT ANS. A)

   1. $28,000/140,000

   2. $30,000/150,000

   3. $84,000/84,000

   4. $90,000/90,000

2. In accounting, depreciation refers to?

   1. deterioration of a fixed asset

   2. systematic and rational expensing of fixed asset cost

   3. the obsolescence of a fixed asset

   4. the decline in value of a fixed asset