QUESTION 27 When the market value of inventory items has declined below their cost, which method would be the most appropriate in complying with GAAP 1. retail 2. lower of cost or market 3.LIFO 4. FIFO QUESTION 28 The effect of recording depreciation for the year is a(n) 1. decrease in net income and no change in assets. 2. increase in assets and an increase in net income. 3. decrease in assets but no change in owners' equity. 4. decrease in assets and a decrease in net income. QUESTION 24 Equipment with a residual value of $50,000 at the end of 10 years was acquired at the beginning of 2019 for $500,000. Assuming the use of the straight-line depreciation method, the journal entry to record depreciation expense for 2021 will have a debit to 1. Depreciation Expense and a credit to Accumulated Depreciation for $45,000 2. Depreciation Expense and a credit to Equipment for $45,000. 3. Depreciation Expense and a credit to Accumulated Depreciation for $50,000 4. Accumulated Depreciation and a credit to Equipment for $50,000. QUESTION 25 A company purchased a patent for $100,000 at the beginning of the current year which it believes has an expected useful life of 5 years. Fortunately, the patent has a legal life of 20 years. How much amortization expense should be recorded in the current year? 1. $5,000 2. $100,000 3. $20,000 4. SO