1. Thompson Manufacturing purchased a new machine. The company's accountant decided to use the double-declining balance (DDB) method of depreciation for the machine. Which of the following best explains why the accountant would use the DDB method?

		Company cash flow improves by spreading the machine's depreciation costs equally.
		The machine's repair costs are likely to increase as the machine ages.
		The machine's service life is determined by the number of hours it is used.
		The machine does not have a future salvage value for the company.

1. Thompson Manufacturing owns a machine that typically experiences significant maintenance costs as it ages. The company's accountant has taken higher depreciation expenses in the early years of the machine's service life to offset high repair costs in the future. Which method of depreciation is used by Thompson?

		Units-of-activity
		Double-declining balance
		Straight-line
		Capital expenditure

1. The owner of Ricardo's Restaurant recently spent $10,000 to replace the restaurant building's roof, which was worn out. Since the roof has been restored to its original condition, its cost should be recorded as a(n)

		intangible asset.
		revenue expenditure.
		credit to Accumulated Depreciation.
		debit to Accumulated Depreciation.

1. Allocating the cost of an oil reserve to accounting periods that benefit from its use is a process known as

		amortization.
		depletion.
		retirement.
		depreciation.