Question 7

When the amount of use of a fixed asset varies from year to year, the method of determining depreciation expense that best matches allocation of cost with revenue is

Question 7 options:

	double-declining-balance method
	straight-line method
	units-of-output method
	MACRS

Question 8

A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-output method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

Question 8 options:

	$5,000
	$35,000
	$21,000
	$45,000

Question 9

A machine is purchased at the beginning of the fiscal year with a cost of $75,000 with an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours. What is the amount of depreciation for the second full year, using the double-declining-balance method?

Question 9 options:

	$17,500
	$37,500
	$18,750
	$16,667

Question 10

Sands Company purchased mining rights for $500,000. It expects to harvest 1 million tons of ore over the next five years. During the current year, Sands mined 350,000 tons of ore. The entry to record the depletion would include

Question 10 options:

	a debit to Depletion Expense for $175,000
	a credit to Depletion Expense for $350,000
	a debit to Accumulated Depletion for $175,000
	a credit to Accumulated Depletion for $350,000

Question 11

Xtra Company purchased a business from Argus for $96,000 above the fair value of its net assets. Argus had developed the goodwill over 12 years. How much would Xtra amortize the goodwill for its first year?

Question 11 options:

	$7,000
	$8,000
	goodwill is not amortized
	not enough information to calculate amortization

Question 12

Fixed assets are ordinarily presented on the balance sheet

Question 12 options:

	at current market values
	at replacement costs
	at cost less accumulated depreciation
	in a separate section along with intangible assets

Question 13

Newport Company has sales of $2,025,000 for the current year. The book value of its fixed assets at the beginning of the year was $550,000 and at the end of the year was $800,000. The fixed asset turnover ratio for Newport is

Question 13 options:

	3.0
	3.6
	3.7
	2.5