Question 1

Kansas Enterprises purchased equipment for $60,000 on January 1, 2024. The equipment is expected to have a five-year service life, with a residual value of $5,000 at the end of five years.

Using the straight-line method, depreciation expense for 2024 would be:

Multiple Choice

$12,000.

$11,000.

$60,000.

None of these.

Question 2

A company purchased a computer that cost $10,000. It had an estimated service life of five years and no residual value. The computer was depreciated by the straight-line method and was sold at the end of the second year of use for $5,000 cash. The company should record:

Multiple Choice

A loss of $1,000.

A gain of $1,000.

Neither a gain nor a lossthe computer was sold at its book value.

Neither a gain nor a lossthe gain that occurred in this case would not be recognized.