Question 6

What type of depreciation occurs when an asset can no longer provide services at the level originally intended?

Select one:

a.Physical depreciation

b.Market depreciation

c.Cost depreciation

d.Functional depreciation

Question 7

Which method of depreciation considers residual value in computing the normal periodic depreciation?

Select one:

a. Straight-line

b. MACRS

c. Declining balance

d. All the above use residual value

Question 8

The accounting term depreciation measures __________.

Select one:

a. An assets market value decline

b. The amount of cash a company sets aside for asset replacement

c. The amount of asset cost allocated to expense over periods benefited

d. Anticipated losses if sold in the used market

Question 9

Accelerated depreciation is primarily used for __________.

Select one:

a. The financial statements of large companies

b. The financial statements of small companies

c. Income tax purposes

d. Both financial reporting and income taxes by most companies

Question 10

To measure depreciation, all of the following most be known EXCEPT __________.

Select one:

a. Market value

b. Residual value

c. Historical cost

d. Estimated life

Question 11

Equipment was purchased for $32,000. It has a useful life of 5 years and a residual value of $4,000. What is depreciation expense for year two under the double declining balance method?

Select one:

a. $5,600

b. $6,720

c. $7,680

d. $12,800

Question 12

On September 1, a machine with a useful life of 8 years and a residual value of $5,000 was purchased for $47,000. What is depreciation expense in the year of purchase under straight-line depreciation assuming a December 31 year end?

Select one:

a. $5,250

b. $5,875

c. $1,750

d. $1,958