Question 24

As blended principal and interest payments are made on a long-term loan,

the interest portion increases and the principal portion decreases.

the interest and principal portions remain the same.

the interest portion decreases and the principal portion increases.

both the interest portion and the principal portion decrease.

Question 23

On January 1, 2018, Anvil Corp. purchased equipment for $60,000. It was expected to last 5 years, after which it will be sold for $5,000. It is expected to be used for a total of 10,000 machine hours, and was used for 750 hours during the year ended December 31, 2018. The depreciation expense for 2018 using the double diminishing-balance method will be

$12,250.

$12,000.

$24,000.

$11,000.

22

On April 1, 2018, a machine was purchased for $33,600. It was estimated that it would have a $3,200 residual value at the end of its 5-year useful life. It was also estimated that the machine would be used for a total of 80,000 hours over the 5 years. If the actual number of machine hours used in 2018 was 12,000 hours and the company uses the units-of-production method of depreciation, the depreciation expense for 2018 would be

$3,780.

$4,560.

$5,040.

$3,420.

21

On January 1, 2018, a machine with a useful life of five years and a residual value of $2,500 was purchased for $25,000. Using the double diminishing-balance method, the depreciation expense for the year ending December 31, 2019 would be

$10,000.

$ 9,000.

$ 5,400.

$ 6,000.