QUESTION 1

1. Use the following information to answer questions 5 through 10.

   XYZ provided the following information to you, the accountant, to record depreciation expense associated with a top-of-the-line machine used to produce widgets:

   Date of purchase 1/1/2021

   Cost $103,000

   Residual value 3,000

   Useful life in years 4

   Expected to produce 1,000,000 widgets

   Widgets produced by year: Year 1 = 400,000; Year 2 = 300,000; Year 3 = 200,000; Year 4 = 100,000

   Required: What is the accumulated depreciation at the end of Year 2 if the straight-line method is used to compute annual depreciation expense?

   	a.	$12,500
   	b.	$50,000
   	c.	$25,000
   	d.	$53,000

QUESTION 2

1. XYZ provided the following information to you, the accountant, to record depreciation expense associated with a top-of-the-line machine used to produce widgets:

   Date of purchase 1/1/2021

   Cost $103,000

   Residual value 3,000

   Useful life in years 4

   Expected to produce 1,000,000 widgets

   Widgets produced by year: Year 1 = 400,000; Year 2 = 300,000; Year 3 = 200,000; Year 4 = 100,000

   Required: What is the book value of the machine after the end of year 2 if the straight-line method is used to compute annual depreciation expense?

   	a.	$12,500
   	b.	$50,000
   	c.	$25,000
   	d.	$53,000

QUESTION 3

1. XYZ provided the following information to you, the accountant, to record depreciation expense associated with a top-of-the-line machine used to produce widgets:

   Date of purchase 1/1/2021

   Cost $103,000

   Residual value 3,000

   Useful life in years 4

   Expected to produce 1,000,000 widgets

   Widgets produced by year: Year 1 = 400,000; Year 2 = 300,000; Year 3 = 200,000; Year 4 = 100,000

   Required: What depreciation expense would be recorded for year 1 if the units-of-production method is used to compute annual depreciation expense?

   	a.	$400,000
   	b.	$30,000
   	c.	$40,000
   	d.	$20,000

QUESTION 4

1. XYZ provided the following information to you, the accountant, to record depreciation expense associated with a top-of-the-line machine used to produce widgets:

   Date of purchase 1/1/2021

   Cost $103,000

   Residual value 3,000

   Useful life in years 4

   Expected to produce 1,000,000 widgets

   Widgets produced by year: Year 1 = 400,000; Year 2 = 300,000; Year 3 = 200,000; Year 4 = 100,000

   Required: What is the book value of the machine after the end of year 1 if the units-of-production method is used to compute annual depreciation expense?

   	a.	$63,000
   	b.	$73,000
   	c.	$3,000
   	d.	$25,000

QUESTION 5

1. XYZ provided the following information to you, the accountant, to record depreciation expense associated with a top-of-the-line machine used to produce widgets:

   Date of purchase 1/1/2021

   Cost $103,000

   Residual value 3,000

   Useful life in years 4

   Expected to produce 1,000,000 widgets

   Widgets produced by year: Year 1 = 400,000; Year 2 = 300,000; Year 3 = 200,000; Year 4 = 100,000

   Required: What depreciation expense would be recorded for year 2 if the double-declining-balance method is used to compute annual depreciation expense?

   	a.	$51,500
   	b.	$77,250
   	c.	$25,750
   	d.	$22,570

QUESTION 6

1. XYZ provided the following information to you, the accountant, to record depreciation expense associated with a top-of-the-line machine used to produce widgets:

   Date of purchase 1/1/2021

   Cost $103,000

   Residual value 3,000

   Useful life in years 4

   Expected to produce 1,000,000 widgets

   Widgets produced by year: Year 1 = 400,000; Year 2 = 300,000; Year 3 = 200,000; Year 4 = 100,000

   Required: What is the book value of the machine at the end of year 2 if the double declining balance method is used to compute annual depreciation expense?

   	a.	$51,500
   	b.	$77,250
   	c.	$25,750
   	d.	$22,000